17 February 2004 External T.I. 2003-0052601E5 - Volunteer exemption

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.

Principal Issues: Whether or not the subsection 81(4) volunteer exemption applies to on-call firefighters.

Position: Question of fact.

Reasons: Subsection 81(4) provides an exemption of up to $1,000 that an individual receives in the year from a government, municipality or other public authority ("the employer") for performing certain volunteer duties. The duties may include those of an ambulance technician or firefighter, or a person assisting in the search for or rescue of individuals or in other emergency situations. The individual cannot have been employed or engaged by "the employer" in the same year, otherwise than as a volunteer, in connection with the performance of any of the duties described above, or similar duties. The amount paid to an individual acting as a volunteer is usually nominal in comparison to what it would have cost in the same circumstances to have the same duties performed by a regular full-time or part-time individual.

XXXXXXXXXX 2003-005260
Kathryn McCarthy, CA
February 17, 2004

Dear XXXXXXXXXX,

Re: On-call firefighter's volunteer exemption - subsection 81(4) of the Income Tax Act

We are writing in response to your letter of December 5, 2003, concerning an unnamed client of yours which is a municipality.

The municipality has firefighters which are on call to respond, should a fire or emergency arise. The municipality does not control whether or not, or for how long, a firefighter attends a particular emergency. Two firefighters included in the on-call group are employed full time by the municipality in other departments (i.e. Parks and Recreation and Public Works). The other firefighters have full-time employers other than the municipality. The on call firefighters are paid an average of $20 per hour or $6,000 per annum. Based on the municipality's understanding, this is similar to amounts paid by other municipalities to part-time firefighters and is much lower than hourly rates paid to firefighters employed on a full-time basis. The municipality pays the firefighters through their payroll system and withholds Part I income tax, but not Canada Pension Plan (CPP) payments or Employment Insurance (EI) premiums.

You inquire as to whether or not these firefighters can be considered "volunteers" who qualify for the exemption pursuant to subsection 81(4) of the Income Tax Act (the Act), and whether or not the municipality is required to withhold CPP payments, EI premiums or Part I income tax on amounts paid to these firefighters.

Our Comments

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. For assistance in determining whether withholdings at source are required from a particular payment, please contact the

CPP/EI Rulings Section of your local Tax Services Office. Further information on withholdings at source from payments made to emergency volunteers is available in the T4001, Employers' Guide to Payroll Deductions, on our web site at www.cra-arc.gc.ca. We are, however, prepared to provide the following general comments with respect to the volunteer exemption pursuant to subsection 81(4) of the Act.

In general, subsection 81(4) of the Act provides an exemption of up to $1,000 that an individual receives in the year from a government, municipality or other public authority ("the employer") for performing certain volunteer duties. The duties may include those of an ambulance technician or firefighter, or a person assisting in the search for or rescue of individuals or in other emergency situations. The individual cannot have been employed or engaged by "the employer" in the same year, otherwise than as a volunteer, in connection with the performance of any of the duties described above, or similar duties.

It is not our practice to render a decision on a generic set of facts with respect to the eligibility of individuals in the service of municipalities or other public authorities for the volunteer exemption under subsection 81(4). As noted above, this is done by your local TSO. The decision must be based on all the facts in the specific situation and, in this regard, the CRA would usually rely on input from the municipality or public authority concerned. If, pursuant to paragraph 81(4)(b) of the Act, the Minister demands certification from the municipality or public authority, such authority must certify in writing that a given individual is a "volunteer" pursuant to paragraph 81(4)(a) of the Act.

The Act does not define "volunteer", therefore the general meaning is considered when applying the exemption for volunteers. A number of factors are used when determining whether or not an individual is a "volunteer". The amount of compensation, however, is an important factor in deciding whether or not a particular individual is acting as a volunteer. The amount paid to an individual acting as a volunteer is usually nominal in comparison to what it would have cost in the same circumstances to have the same duties performed by a regular full-time or part-time individual.

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 Planning Branch