28 May 2003 External T.I. 2003-0002305 - UNION EXECUTIVE REMUNERATION

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Whether a per-diem/expense allowance paid by a union to its executive members is taxable.

Position: Executive members of a union who receive a general per-diem/expense allowance are employees of the union and in receipt of taxable amount

Reasons: Subsection 5(1) of the Act includes in income salary, wages and other remuneration received in respect of an office or employment. An office is defined in subsection 248(1) of the Act to include any position that entitles an individual to a fixed or ascertainable stipend or remuneration. It also includes positions where the incumbent is elected by popular vote or appointed in a representative capacity. Further, a person holding such an office is considered an officer and an employee. If an amount is not generally included in employment income under subsection 5(1) of the Act, other specific provisions could apply: paragraph 6(1)(c) director's or other fees, or paragraph 6(1)(b) allowances received in respect of personal, living, or other expenses. As a result, the general per-diem/expense allowance described by the correspondent is taxable.

Randy Hewlett, B.Comm.

XXXXXXXXXX 613-957-8973
2003-000230
May 28, 2003

Dear XXXXXXXXXX:

Re: Taxable Status of Per-Diems Paid To Union Executive

We are writing in response to your letter of January 8, 2003, and additional information submitted in your letter of May 16, 2003, wherein you requested our opinion on whether a per-diem/expense allowance paid by a union to its executive members is taxable.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we offer the following general comments.

Subsection 5(1) of the Income Tax Act (the Act) includes in a taxpayer's income for a taxation year salary, wages and other remuneration received in the year in respect of the office or employment. In this regard, an office is defined in subsection 248(1) of the Act to include any position that entitles an individual to a fixed or ascertainable stipend or remuneration. It also includes positions where the incumbent is elected or appointed in a representative capacity. Further, a person holding such an office is considered an officer and an employee.

If an amount is not generally included in employment income under subsection 5(1) of the Act, other specific provisions could apply. For example, paragraph 6(1)(c) of the Act includes in employment income director's or other fees received in the year in respect of an office or employment. Also, paragraph 6(1)(b) of the Act includes in employment income allowances received in respect of personal, living, or other expenses. There are exceptions in paragraph 6(1)(b) for the inclusion of some allowances, such as, reasonable allowances for the use of a motor vehicle for travelling in the performance of the duties of the office or employment.

While your correspondence does not describe why the union paid the allowance or how the amount was determined, on the basis of the general information provided, we are of the view that it is taxable employment income of the executive members in the year received.

We trust our comments will be of assistance to you.

Yours truly,

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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