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 ISSUE:
Whether paragraph 81(1)(h) applies to amounts received for care of seniors.
Position TAKEN:
General information provided.
Reasons:
Question of fact.
XXXXXXXXXX T. Young, CA
2003-002407
June 27, 2003
Dear XXXXXXXXXX:
Re: XXXXXXXXXX
We are writing in response to your letter of May 26, 2003, to the Ottawa Technology Centre requesting a ruling on whether paragraph 81(1)(h) of the Income Tax Act (the "Act") would apply to your situation. Your letter was forwarded to us for reply.
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 ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. However, we are prepared to provide the following comments, which may be of assistance to you.
Paragraph 81(1)(h) of the Act exempts from the income of an individual (other than a trust), certain social assistance payments ordinarily made on the basis of a means, needs, or income test provided certain conditions are met. A payment will be excluded from income where:
1. The payment is made under a program provided for by federal or provincial law;
2. The payment is received directly or indirectly by a caregiver for the benefit of the cared-for individual;
3. The cared-for individual cannot be the caregiver's spouse or common-law partner or related to the caregiver or the caregiver's spouse or common-law partner;
4. No family allowance under the Family Allowances Act or any similar allowance provided for by provincial law can be payable in respect of the cared-for individual for the period for which the social assistance payment is made.
5. The cared-for individual must reside in the caregiver's principal place of residence, or the caregiver's principal place of residence must be maintained for use as the cared-for individual's residence, during the period for which the payment is made.
We note that the information included with your letter stated that paragraph 81(1)(h) of the Act could apply to an "Individual or Corporation (not a trust)". We wish to emphasize that paragraph 81(1)(h) can only apply to an individual (other than a trust). Paragraph 248(1) of the Act defines an individual as "a person other than a corporation" meaning that paragraph 81(1)(h) cannot apply to corporations. Therefore, if the payments are received by XXXXXXXXXX, paragraph 81(1)(h) cannot apply.
The information also indicated that the term "principal place of residence" is defined in section 248 of the Act, but it should be noted that this term is not defined in the Act. A taxpayer's principal place of residence is the place where the taxpayer regularly, normally or customarily lives. In our view, the place where the taxpayer normally sleeps is a significant factor as well as where most of the taxpayer's belongings are kept and where the taxpayer receives his or her mail. "Principal place of residence" should not be confused with "principal residence", which is defined in section 54 of the Act, for purposes of determining a taxpayer's principal residence exemption under paragraph 40(2)(b) of the Act.
In your letter, you referred to "the criteria as indicated by the enclosed pages from the Employment Standards Code". As stated in Income Tax Technical News 17 (dated April 26, 1999), providing the requirements of the paragraph are otherwise satisfied, paragraph 81(1)(h) can apply to an individual who is either employed or self-employed. The Employment Standards Code (of Alberta) is not pertinent to the determination of whether paragraph 81(1)(h) is applicable to a particular situation.
If you require further assistance in determining the income tax treatment of specific payments and whether paragraph 81(1)(h) of the Act would apply, please contact the Client Services Division of the XXXXXXXXXX Tax Services Office.
The documents referred to above may be found on our web site at www.ccra.gc.ca.
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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