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:
Where an Ontario adult resident ("Disabled Person") is mentally incapable of managing his property and receives income support ("Income Support") under the Ontario Disability Support Program Act ("Support Program Act"), and where the Disabled Person's next-of-kin ("Next-of-Kin") is appointed by the Director of the Support Program Act to act for the Disabled Person, whether the Next-of Kin would qualify as a "legal representative" of the Disabled Person under subparagraph 150(1)(d)(i) of the Income Tax Act with respect to the Income Support.
Position:
Yes
Reasons:
The Next-of-Kin appears to have the power to administer, wind up, control or otherwise deal in a representative or fiduciary capacity with the Income Support.
2003-004780
XXXXXXXXXX Daniel Wong
(613) 954-4949
January 21, 2004
Dear XXXXXXXXXX:
Re: Technical Interpretation Request:- Subparagraph 150(1)(d)(i) of the Income Tax Act ("Act")-"legal representative"
This is in reply to your email of November 1, 2003 addressed to Ms. Maureen Tapp (Director of Special Programs and Partnerships, Benefit Programs Directorate) wherein you described the following facts. An Ontario adult resident ("Disabled Person") is mentally incapable of managing his property but he is not hospitalized in a psychiatric facility. No person has been appointed as a guardian for the Disabled Person under the Ontario Substitute Decisions Act ("Substitute Decisions Act"). Further, the Disabled Person has not given a valid power of attorney for property or personal care to anyone. The Disabled Person has no assets and no income other than the income support ("Income Support") that the person receives under the Ontario Disability Support Program Act ("Support Program Act"). The Director of the Support Program Act has appointed the Disabled Person's next-of-kin ("Next-of-Kin) to act for the Disabled Person with respect to the Income Support.
You stated that the Disabled Person is unable to file a federal income tax return due to mental incapacity. You also indicated that it would be expensive to have a person appointed as a guardian for the Disabled Person under the Substitute Decisions Act. You queried as to whether the Next-of-Kin appointed under the Support Program Act could file the return on behalf of the Disabled Person with respect to the Income Support. Your request was forwarded to the Income Tax Rulings Directorate for reply.
In your letter, you outlined what appears to be an actual fact situation related to transactions and events that have taken place. The review of such situations is generally the responsibility of the local taxation services offices and, as outlined in paragraph 22 of Information Circular 70-6R5, it is not our practice to provide specific opinions on factual situations otherwise than in the context of an advance income tax ruling. In any event, a request cannot be considered for a ruling when the transactions are completed or where the issues involved are primarily questions of fact. Nevertheless, we are prepared to provide the following comments that we hope will be of assistance to you.
Subparagraph 150(1)(d)(i) of the Act states that in the case of an individual, a return of income shall be filed on or before the following April 30 by that person or, if the person is unable for any reason to file the return, by the person's guardian, committee or other legal representative.
The term "legal representative" of a taxpayer is defined in subsection 248(1) to mean a trustee in bankruptcy, an assignee, a liquidator, a curator, a receiver of any kind, a trustee, an heir, an administrator, an executor, a liquidator of a succession, a committee, or any other like person, administering, winding up, controlling or otherwise dealing in a representative or fiduciary capacity with the property that belongs or belonged to, or that is or was held for the benefit of, the taxpayer or the taxpayer's estate.
Accordingly, a person who has the power to administer, wind up, control or otherwise deal in a representative or fiduciary capacity with a taxpayer's property would qualify as a "legal representative" of the taxpayer and, consequently, would be entitled to file a tax return on behalf of the taxpayer pursuant to subparagraph 150(1)(d)(i) of the Act.
The issue in this case is whether the Next-of-Kin would qualify as a "legal representative" of the Disabled Person with respect to the Income Support under subparagraph 150(1)(d)(i).
Subsections 12(1), (2) and (4) of the Support Program Act state that
12(1) The Director may appoint a person to act for a recipient if there is no guardian of property or trustee for the recipient and the Director is satisfied that the recipient is using or is likely to use his or her income support in a way that is not for the benefit of a member of the benefit unit.
(2) The Director may provide income support for the benefit of a recipient to the recipient's guardian of property or trustee or to a person appointed under subsection (1).
(4) A person appointed under this section to act for a recipient shall report and account in accordance with the regulations.
Subsection 55(1) of the Support Program Act also states that the Lieutenant Governor in Council may make regulations, inter alia, prescribing the procedures to be followed in determining the need for and appointing a person to act for a recipient under section 12 and providing measures with respect to the person's accountability and reporting requirements.
Subsection 49(3) of Ontario Regulation 222/98 (to the Support Program Act) states that a person appointed to act for a recipient shall file an annual report with the Director accounting for the use of the income support received on behalf of a person and shall provide such supplementary information, monthly or otherwise, including receipts, as is required by the Director.
In our view, in the present case, the Next-of-Kin appears to have the power to administer, wind up, control or otherwise deal in a representative or fiduciary capacity with the Income Support. Consequently, the Next-of-Kin would qualify as a "legal representative" of the Disabled Person with respect to the Income Support under subparagraph 150(1)(d)(i).
We trust that our comments will be of assistance.
David Palamar
Corporate Reorganizations Section III Manager
for Division Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Legislation Branch
c.c. Maureen Tapp, Benefit Programs Directorate
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