23 December 2009 External T.I. 2009-0314661E5 - Doctor's retention bonus - business or personal

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 payments received by a doctor from Doctors Manitoba's Physician Retention Program can be reported by the doctor's professional corporation or whether it is personal income.

Position: Although it is a question of fact, it appears that the income should be reported by the doctor personally.

Reasons: The eligibility requirements for the retention payments specify that only Manitoba physicians who are fully registered in Manitoba will qualify for such payments.

XXXXXXXXXX 								2009-031466
J. Gibbons, CGA
December 23, 2009

Dear XXXXXXXXXX :

Re: Doctors Manitoba's Physician Retention Program (the "Program")

This is in reply to your letter dated May 12, 2009, concerning payments you received in 2008 from the Program (hereinafter referred to as the "Retention Payments"). In particular, you have asked us whether the Retention Payments should be reported by your professional corporation or by you personally.

It is our understanding that only Manitoba physicians who held a full registration with the College of Physicians & Surgeons of Manitoba and paid dues to the Manitoba Medical Association during the Program may be eligible for Retention Payments. In addition to these requirements, Retention Payments are only available to physicians who also earned income directly or indirectly from Manitoba Health for providing medical services, teaching, research and/or administrative duties.

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 income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Also, where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. Nonetheless, we are prepared to offer the following general comments.

The issue of determining which person should report particular income is a question of fact that depends on the particular circumstances, including any underlying contracts or, in the case of government payments, any applicable law(s) or regulation(s). In the particular circumstances, one of the key factors would be the eligibility requirements under the Program. In this regard, since these requirements specify that only Manitoba physicians who are fully registered in Manitoba can qualify for Retention Payments, we agree with the statement made by Doctors Manitoba that these payments should only be reported by physicians personally, even if in the particular circumstances, the physician carries on his or her professional practice through a corporation.

We trust these comments will be of assistance.

Yours truly,

G. Moore
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch