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: 1. Are fees paid to board member (honoraria) subject to income tax deductions at source? 2. Should such fees and deductions be reported on a T4 or T4A?
Position: Remuneration paid to board members is considered income from office and subject to withholding of tax at source. The total income and any withholdings for the year should be reported on a T4 information slip.
Reasons: In accordance with the applicable legislation.
T. Posadovsky, CMA
September 30, 2010
Dear XXXXXXXXXX :
Re: Board Member Fees
We are writing in reply to your correspondence dated August 4, 2010, and our telephone conversation of September 29, 2010 (Posadovsky/XXXXXXXXXX ), requesting our comments on whether honoraria paid to members of the XXXXXXXXXX board are subject to income tax deductions, Canada Pension Plan ("CPP") contributions, and Employment Insurance ("EI") premiums that should be reported on a T4 information slip.
You explained that XXXXXXXXXX is a XXXXXXXXXX established under the XXXXXXXXXX . XXXXXXXXXX is governed by a ten-member board, three of who are appointed by the Minister of XXXXXXXXXX , and seven who are elected by the member institutions. You also indicated that fees paid to board members are a fixed amount for each day the board member attends meetings.
In accordance with paragraph 6(1)(c) of the Income Tax Act (the "Act"), director's or other fees "received by the taxpayer in the year in respect of, in the course of, or by virtue of an office or employment" are classified as income from an office or employment.
Subsection 248(1) of the Act defines an "office" as being, among other things, "the position of an individual entitling the individual to a fixed or ascertainable stipend or remuneration and includes ... any other office, the incumbent of which is elected by popular vote or is ... appointed in a representative capacity ... and "officer" means a person holding such an office".
Where an individual is a member of a board by virtue of being "appointed in a representative capacity" by a provincial government, or "elected to the position by a popular vote", and the board's legislation provides for a fixed and ascertainable honorarium or fee to be paid to the board member, the amount received by the member would be a "director's or other fee" within the meaning thereof in paragraph 6(1)(c) of the Act. All remuneration paid to a board member for services should be reported as employment income on a T4 information slip.
As discussed in our telephone conversation, the determination as to whether particular employment is CPP pensionable and/or EI insurable is a question of fact. A ruling may be obtained from the CPP/EI Rulings division of your local tax services office by completing and submitting form CPT1, Request for a Ruling as to the Status of a Worker under the Canada Pension Plan or Employment Insurance Act, available at www.cra-arc.gc.ca/E/pbg/tf/cpt1/README.html.
We trust our comments will be of assistance to you.
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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