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: The tax treatment of a personal care allowance received by an individual from a workers' compensation board.
Position: The allowance is included in computing income pursuant to paragraph 56(1)(v) and deducted in computing taxable income under subparagraph 110(1)(f)(ii).
Reasons: Paragraph 56(1)(v) requires the allowance to be included in income.
March 7, 2003
Calgary Tax Services Office HEADQUARTERS
Garry Quiring Bob Naufal, CMA
Investigations Division (613) 957-2744
2003-000366
Personal Care Allowance Awarded Under Workers' Compensation Act
We are writing in response to your memorandum of February 3, 2003 wherein you requested our comments with respect to whether a payment described as a personal care allowance ("PCA"), received by an individual under a provincial workers' compensation statute is taxable. The letter describes a situation whereby an individual is receiving approximately $6,000 per month as a PCA from the Alberta Workers' Compensation Board to pay for nursing care. The amount is not paid to the individual based on a means or needs test and is not a reimbursement of actual nursing expenses. The individual in question is cared for by his spouse.
Paragraph 56(1)(v) of the Income Tax Act (the "Act") requires that compensation in respect of injury, disability or death received under an employees' or workers' compensation law be included in income. If a payment received by an individual, as in this case, is in the form of an allowance and not as a reimbursement of actual expenses incurred by the individual, we are of the view that paragraph 56(1)(v) of the Act applies to include the amount in the individual's income. The amount so included may, by virtue of subparagraph 110(1)(f)(ii) of the Act, be deducted in computing his taxable income for the year.
We trust our comments will be of some assistance.
D. Boychuk, LL.B
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
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