Translation disclaimer
This translation was prepared by Tax Interpretations Inc. The CRA did not issue this document in the language in which it now appears, and is not responsible for any errors in its translation that might impact a reader’s understanding of it or the position(s) taken therein. See also the general Disclaimer below.
Principal Issues: [TaxInterpretations translation] Are the amounts received by the taxpayer social assistance benefits usually paid under a provincial statutory program after a means, needs and income test?
Position: In the situation presented, the amounts paid by the public institution represent such amounts despite the fact that part of those amounts is paid for places reserved for users during the time when users do not occupy them. As for the amounts paid by the users, this depends on the source of the funds.
Reasons: The amounts are paid for accommodation, support, continuous supervision and assistance services for users who must attend the psychiatric day hospital and cannot be maintained in their environment for the duration of the treatment and for clients with severe and persistent disorders who require temporary accommodation to resolve a psychosocial crisis. In our view, this resource constitutes relief provided by the State to people in need because of their state of health, which, in our view, constitutes social assistance. The amounts paid by the public institution are paid under a provincially legislated program. They are usually paid after an examination of the needs of the users because, according to the Act respecting health services and social services, the remuneration is calculated according to the degree of support or assistance required by the users.
With respect to amounts paid where a space reserved by a public facility is not occupied by a user, the explanatory notes from the Department of Finance indicate that paragraph 81(1)(h) of the Act was intended to cover an amount of this nature. We understand that the amounts are paid based on a review of the users' needs because the amount is calculated based on what the users would have needed if they had occupied the spaces. Furthermore, we also understand that the use of the word "ordinarily", where paragraph 81(1)(h) refers to amounts that are ordinarily paid after a means, needs and income test, could allow for the characterization of amounts received for places reserved but not occupied.
December 16, 2004
XXXXXXXXXX Headquarters
XXXXXXXXXX Tax Services Office Sylvie Labarre, CA
(613) 957-8953
2004-010089
Social assistance benefits
This is further to your email of October 29, 2004 in which you requested our opinion regarding the application of paragraph 81(1)(h) of the Income Tax Act (the "Act") to income received by XXXXXXXXXX who are the owners of "XXXXXXXXXX" (the "Taxpayer").
The Facts
On XXXXXXXXXX, the Taxpayer signed a contract with XXXXXXXXXX. According to Article XXXXXXXXXX of the contract, the Régie régionale de la Santé et des Services sociaux de XXXXXXXXXX [Regional Board of Health and Social Services of XXXXXXXXXX] authorizes XXXXXXXXXX to recruit an intermediate resource under section 301 of the Act respecting Health Services and Social Services (ARHSSS).
According to Article XXXXXXXXXX of the contract, the creation of the intermediate resource is for the accommodation, support and assistance of adults benefiting from the services of the psychiatric day hospital program. Article XXXXXXXXXX of the contract also states that the recruitment of the intermediate resource is necessary to make the attendance of the day hospital accessible for users who cannot be maintained in their environment for the duration of the treatment and for clients with severe and persistent disorders who require temporary accommodation to resolve a psychosocial crisis.
In this regard, there is also a letter dated XXXXXXXXXX (the "Letter") indicating that, for a number of years, the Taxpayer has been a family-type resource that makes it possible to serve a clientele that needs to attend the day hospital and that has severe and persistent psychiatric disorders, and that the Taxpayer offers accommodation, support, continuous monitoring and assistance services to patients referred by their institution.
The Taxpayer undertakes to make XXXXXXXXXX places available to users referred by the XXXXXXXXXX. According to the Letter, the amounts paid to the Taxpayer are paid under the ARHSSS as part of the provincial non-institutional resources program. Article XXXXXXXXXX of the contract refers to this financial contribution. This Article reads as follows:
XXXXXXXXXX
Question
You wish to know whether the amounts received by the Taxpayer are social assistance benefits within the meaning of paragraph 81(1)(h), given, inter alia, that part of those amounts is intended to pay for reserved places that are not always occupied.
In order to benefit from paragraph 81(1)(h), several elements must be satisfied. First, the amounts must be social assistance benefits.
The term "social assistance benefit" is not defined in the Act. The term should therefore be given its ordinary meaning. One of the definitions of "benefit" according to the Grand dictionnaire terminologique is the payment or provision of goods or services to compensate for a social risk or, more generally, to ensure the economic security of the recipient [TaxInterpretations translation]. On the other hand, it could be that the term benefit only means payment since the English version of the Act uses the expression "social assistance payment".
Furthermore, the Multi Dictionnaire de la langue française defines the term "assistance" as being help, relief [TaxInterpretations translation], whereas one of the definitions of the Grand dictionnaire terminologique is "all relief of various kinds given without consideration by the State, charities and associations to persons in need" [TaxInterpretations translation]. In our view, the definition of the word "assistance" does not refer solely to relief for people whose need is financial.
In this situation, the amounts are paid for accommodation, support, continuous supervision and assistance services for users who must attend the psychiatric day hospital and cannot be maintained in their environment for the duration of the treatment and for clients with severe and persistent disorders who require temporary accommodation to resolve a psychosocial crisis. In our view, this resource constitutes a relief provided by the State to people in need because of their state of health. Consequently, the amounts paid for these services represent social assistance benefits.
Next, it is necessary to consider whether the social assistance benefit is usually paid under a federally or provincially legislated program, on the basis of a means, needs and income test. According to the contract, the Taxpayer is an intermediate resource. Consequently, the amounts are paid under an intermediate and family-type resource program provided under the provincial ARHSSS.
Section 303 of the ARHSSS provides for the classification of the services of an intermediate resource and its remuneration. Here is an extract:
In order to foster an adequate framework and the regional implementation of intermediate resources, and to ensure sufficient flexibility for the emergence of new resources, the Minister shall propose to agencies a classification of the services offered by intermediate resources based on the degree of support or assistance required by users.
…
The remuneration for each type of service listed in the classification established under the first paragraph is determined … by the Minister, with the authorization of the Conseil du trésor… .
In reading this section of the ARHSSS, we note that the amount of compensation paid to the intermediate resource by the public institution is calculated on the basis of an examination of the needs of the users, since it is calculated according to the degree of support or assistance required by the users.
With respect to amounts paid when a space reserved by the public facility is not occupied by a user, the explanatory notes from the Department of Finance indicate that paragraph 81(1)(h) was intended to cover an amount of this nature. We understand that the amounts are paid based on a review of the users' needs because the amount is calculated based on what the users would have needed if they had occupied the spaces. Furthermore, we also understand that the use of the word "ordinarily", in the context of paragraph 81(1)(h) referring to amounts that are ordinarily paid on the basis of a means, needs and income test, could allow for the characterization of amounts received for places reserved but not occupied.
As regards the contribution of users (who, according to the information provided, were all referred by XXXXXXXXXX), it could also constitute a social assistance benefit. This would be the case, for example, for any part of a user's contribution that comes from the guaranteed income supplement or spouse's allowance paid in accordance with the Old Age Security Act, or that comes from amounts of last-resort financial assistance paid under the Employment Assistance Program in accordance with the Quebec Act respecting Income Support, Employment Assistance and Social Solidarity.
We are of the view that the amounts received by the Taxpayer for the occupied places benefit the beneficiaries given the benefit to the beneficiaries of the accommodation, support, assistance and supervision. We are also of the view that the amounts received by the Taxpayer for places reserved but not occupied benefit potential users.
In conclusion, if the other conditions of paragraph 81(1)(h) are satisfied, paragraph 81(1)(h) applies to contributions from XXXXXXXXXX and could, as discussed above, apply to certain contributions from users.
For your information, unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, the electronic library version can be provided. Alternatively, the client may request a severed copy using the Privacy Act criteria, which does not remove client identity. Requests for this latter version should be made by you to Ms. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.
We hope you find these comments are of assistance. If you require any further information regarding the content of this document, please do not hesitate to contact us.
Ghislaine Landry, CGA
for the Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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