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 consideration received by a volunteer is taxable under the Income Tax Act.
Position: It is a question of fact, but probably not.
Reasons: When consideration is nominal and unlikely to ensure the provision of services, and does not represent the FMV of the services, there may be no tax implications. It is generally reasonable to consider that a golf marshal who receives free rounds as compensation is a volunteer. This determination may be affected if the value of the compensation can no longer reasonably be considered to be nominal
2009-032333
XXXXXXXXXX Brenda White
519-645-5454
December 1, 2009
Dear XXXXXXXXXX :
Re: Golf Marshalls
This is in response to your letter of May 1, 2009 inquiring about the taxability of compensation provided to golf marshals. You have indicated that the golf marshals receive vouchers that may be redeemed during non-peak periods for free rounds of golf. At the end of the season, 50% of the individual's unused rounds are forfeited.
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 a request for an advance income tax ruling submitted in the manner set out in 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. Where the particular transactions are complete, the inquiry should be addressed to the relevant tax services office, a list of which 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 comments in respect of the issues that you raised. Please note, however, that these comments are of a general nature only and are not binding on the CRA.
Generally speaking, where compensation is paid to an individual for services rendered to another party, the amount of such compensation would constitute income for purposes of the Income Tax Act (the "Act"); either as income from an office or employment, or as business income of an independent contractor. It frequently happens that individuals, often referred to as "volunteers," perform services for no compensation or for compensation that is nominal. However, it should be noted that the Act does not define the term "volunteer" and except for limited situations involving individuals providing certain emergency services, does not specifically address the concept. Nonetheless, in these situations, the receipt of nominal compensation by a so-called volunteer will have no income tax implications.
To be considered nominal, the compensation paid to the individual must generally be significantly less in comparison to what it would have cost to have the same duties performed by a regular employee or independent contractor. In other words, nominal consideration is unlikely to be enough to ensure the provision of services by the volunteer and does not reflect the fair market value of the services rendered. It may not adequately reflect the amount of work performed or the quality of the services provided. However, when the amount of remuneration paid to volunteers is sufficient to influence their involvement or participation, it is very likely that the remuneration is taxable as employment income or income from a business.
It is generally reasonable to consider that a golf marshal who is offered free rounds of golf in exchange for the performance of his or her responsibilities does so as a volunteer. This conclusion may be affected if the value of the particular golf rounds is unusually high or if rounds are awarded for a disproportionately minimal amount of work performed.
We trust these comments will be of assistance.
Yours truly,
Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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