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: Are payments made to a caregiver to be included in the caregiver's income?
Position: Question of Fact.
Reasons: Dependant on whether the caregiver meets the requirements articulated in ITTN-31R2.
XXXXXXXXXX Shelley Lewis
May 24, 2007
Re: Payments to Caregivers
We are writing in response to your October 12th, 2006 letter wherein you inquired as to the tax treatment of amounts you will be receiving from the Yukon government for providing unrelated persons with independent living services in your home.
You inquired as to the tax treatment of the following type of payments:
- per diem payments to be paid to you to provide support in your home to persons with what you have described as cogitative disabilities (the "Tenants"); and
- rent to be paid to you by the Tenants.
You have provided us with the following details:
A Yukon Government program has recently approved your home for purposes of providing supported independent living services to individuals who are no longer able to function safely at home or to individuals who, without such services, would otherwise be in a hospital.
Your home includes a 1,000 square foot living area where the Tenants will be living. The Tenants are not related to you and do not receive a family allowance under the Family Allowance Act. You will receive a daily per diem from the Yukon Government as compensation for the independent living support that you will provide the Tenants. In addition, the Tenants will pay you rent.
The situation outlined in your letter relates to a factual one, involving a specific taxpayer. It is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advanced income tax ruling. For more information about how to obtain a ruling, please refer to Information Circular 70-6R5, Advanced Income Tax Rulings, dated May 17, 2002. This Information Circular and other CRA publications can be accessed on the internet at http://www.cra-arc.gc.ca. Should your situation involve a specific taxpayer and a completed transaction, you should submit all relevant facts and documentation to the appropriate Tax Services Office ("TSO") for their views. A list of TSOs is available on the "Contact Us" page of the CRA website. Although we cannot comment on your specific situation, we are prepared to provide the following general comments, which may be of assistance.
Section 81 of the Income Tax Act (the "Act") lists various amounts that are not included in computing a taxpayer's income. In general, paragraph 81(1)(h) of the Act excludes from income social assistance payments paid to a caregiver for the benefit of an adult or child under that person's care (the "Cared-for Individual"). This will be the case provided all of the following conditions, detailed Income Tax Technical News #31R2 dated May 16, 2006, are met:
1. The payment is a social assistance payment ordinarily made on the basis of a means, needs, or income test,
2. The payment is made under a program provided for by a federal, provincial or territorial law,
3. The payment is received directly or indirectly by the caregiver for the benefit of the Cared-for Individual,
4. The Cared-for Individual is not the caregiver's spouse or common-law partner or related to the caregiver or the caregiver's spouse or common-law partner,
5. No family allowance under the Family Allowances Act or any similar allowance provided for by provincial or territorial law is payable in respect of the Cared-for Individual for the period for which the social assistance payment is made, and
6. The Cared-for Individual resides in the caregiver's principal place of residence, or the caregiver's principal place of residence is maintained for use as the Cared-for Individual's residence, during the period for which the payment is made.
In respect of rent, where a caregiver receives payments for care that are excluded from income by paragraph 81(1)(h) of the Act, as described above, the exemption may also apply to rent paid to that caregiver by a Cared-for Individual if the rent comes from social assistance payments received by the Cared-for Individual.
If the income exclusion in paragraph 81(1)(h) of the Act does not apply, the subject payments would be taxable income of a caregiver. Depending on the facts of each case, the subject payments may be included in income as:
- income from a business under section 9 of the Act; or
- employment income under section 5 of the Act.
We trust that these comments will be of assistance.
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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