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.
Treatment under the Act of the following payments received under a living organ donor program run by a charitable organization:
· A living allowance paid to a donor; and
· The reimbursement of specific personal expenses incurred by a donor
1. Within the scope of information provided, tax exempt
1. Not an "income ..... from a source" within the meaning section 3
2. Not income from a source that is taxable on the basis that they are for personal expenses not normally deductible for tax purposes
XXXXXXXXXX D Tiu
January 8, 2007
Re: Payments Received Under A Living Organ Donor Program
We are writing in response to your June 15th, 2006 inquiry on the above subject and further to our subsequent telephone discussions (XXXXXXXXXX/Tiu). You inquired as to the treatment under the Income Tax Act (the "Act") of the payments received as a living allowance to or a reimbursement of specific personal expenses incurred by a donor under a living organ donor program run by a charitable organization.
You indicated that a registered Charitable Public Foundation (the "Foundation") in Canada, which is established for the purpose of research, treatment and prevention of organ disease in humans, proposes to enter into a Living Organ Donor Expense Reimbursement Program (the "Program") in order to relieve some of the economic burdens of the donors. Donors may either be residents or non-residents of Canada.
Under the Program, the Foundation will:
- Reimburse reasonable out-of-pocket expenses (the "Reimbursements") of the living organ donors up to certain dollar limits by type of expense (travel, parking, accommodation); and
- Provide a living allowance (the "Allowance") up to an aggregate maximum of $6,600 to be paid in weekly amounts based on the lesser of:
- $400 per week or,
- 55% of weekly earnings.
To be eligible for the Allowance, the Foundation will require that the donor exhaust all employment related avenues of funding such as sick pay, vacation time, paid leave of absence, etc, before submitting a claim for the Allowance.
Within the scope of the information provided and described in the foregoing, it is our view that the Allowance is tax-exempt on the basis that it is not an "income ..... from a source" within the meaning of section 3 of the Act. In our opinion, the Allowance is not so much to replace the income of the donor that may be affected but rather to recognize the financial sacrifice the donor may have to endure in the process and to offset any additional personal expenses not covered by the Reimbursements, as evidenced by the fact that the aggregate maximum amount that can be received by the donor is $6,600.
In our opinion, the Reimbursements are not income from a source that is taxable on the basis that they are for specific out-of-pocket personal living expenses.
We trust our comments are of assistance.
For Division Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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