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: Taxability of home boarding income to recipients. Host home providers receive payment to board children from a remote location to permit them to attend secondary school.
Position: The taxability of the amounts paid to host home providers is a question of fact, which may vary case by case. For example, if the amount paid to the home providers is strictly to reimburse costs and there is no element of income, it would not be taxable. However, if there is an element of income, its character must be determined. If there is sufficient activity and commerciality, it would be appropriate to treat it as business income, whereby the host home provider would then be entitled to business deductions. If there were a rental income component, then it would be appropriate to treat it as property income, subject to rental expense restrictions.
Reasons: Insufficient information provided. Each recipient's situation and therefore tax treatment may differ.
XXXXXXXXXX Joy Bertram,
May 23, 2007
Re: Technical Interpretation request - Home Boarding - School Children from Remote Location
This is in response to your email of January 29, 2007 regarding the taxability of payments received from a local XXXXXXXXXX by host home providers (the "Hosts") for boarding children from a remote location to enable them to attend secondary school.
The situation outlined in your letter relates to a factual one, involving specific taxpayers. 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 Canada Revenue Agency ("CRA") publications can be accessed on the internet at http://www.cra-arc.gc.ca. Should your situation involve specific taxpayers 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 TSO's 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.
The taxability of amounts paid to Hosts is a question of fact, which may vary case by case. For example, if the amount paid to the Host is strictly to reimburse reasonable and accountable expenses and there is no element of income, it would not be taxable. However, if there were an element of income, the payment's character would have to be determined. If there were sufficient activity and commerciality, it would be appropriate to treat the payment as business income, whereby the Host would then be entitled to business deductions. If there were a rental income component, then it would be appropriate to treat the payment as property income, subject to rental expense restrictions.
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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