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.
We are responding to your memorandum of May 3, 1989, requesting our views on the taxability of a retainer to be paid by the XXX.
XXX is of the view that there does not exist an employer/employee relationship between XXX and the recipients so as to characterize the payments as income from employment. It is also of the view that the payments are not made pursuant to a contractual obligation since the parties are not obliged to sign a formal agreement in respect of the arrangement.
You have expressed the view that the retainer should be included in income by virtue of Section 9 of the Income Tax Act if it can be determined that the XXX can be considered as carrying on a business for profit or with a reasonable expectation of profit.
Based on the information presented, we would agree that there would not appear to be an employer/employee relationship between XXX and the recipient. We are of the view, however, that the payments would be made pursuant to a contractual arrangement between XXX whether or not any document is formally signed. Per diem allowances received by a XXX are not required to be included in income unless, as you noted above, the XXX can be considered as carrying on a business for profit or with a reasonable expectation of profit. Where the negate of such allowances in respect of a XXX would not have otherwise placed the recipient in a profit position, the addition of the XXX retainer would increase the likelihood of the recipient being require to include the amounts in income.
We hope that our comments will of assistance to you.
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© Her Majesty the Queen in Right of Canada, 1989
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© Sa Majesté la Reine du Chef du Canada, 1989
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