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.
J.D. Jones (613) 957-2104 JUN 3 1988
Dear Sirs:
RE: RCMP Transfer Allowance
This is in regard to your letter dated March 15, 1988 in which you seek a reconsideration of the Department's position with respect to the tax treatment of the subject allowances due to recent Federal Court of Canada, Trial Division Decisions (McNeill v. The Queen 86 DTC 6477 and Segall v The Queen 86 DTC 6486).
In our view, the above mentioned court cases do not affect our position as outlined to your office in our letter dated July 21, 1987. In the above cases, Treasury Board authorized a payment entitled "An Air Traffic Control Linguistic Relocation Allowance". This allowance was comprised of two components; an Accommodation Differential and B Social Disruption Allowance. The former was intended to defray the additional costs of a larger mortgage which would have to be assumed on relocation. These cases are based on finding of facts under rather unique and exceptional circumstances. The Court was of the view that the payments were made primarily for reasons unrelated to the employment relationship, namely, public and labor relations considerations. In our view, the RCMP transfer allowance is not at all similar to these payments.
The second component of the relocation allowance considered by the Court was termed a "Social Disruption Allowance". The Court found this amount to be a taxable receipt of the recipient in the absence of any proof that the recipient actually suffered other losses due to his relocation. As such, a benefit was deemed to hare accrued to the recipient and fall within the meaning of paragraph 6(1)(a) of the Income Tax Act.
It is our view that the RCMP transfer allowance is similar to the "Social Disruption Allowance" in the manner in which it is calculated and in Its nature (non-accountability and factors it is intended to offset). It is for these reasons the Department is of the opinion this allowance is properly taxable as remuneration from employment.
We hope the foregoing comments clarify this Department's position on the matter.
Yours truly, ORIGINAL SIGNED
P.D. FUOCO for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
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