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.
| |
June 8, 1989 |
| Enquiries and Taxpayers |
Small Business and |
| Assistance Division |
General Division |
| P. McNally |
J.A. Szeszycki |
| Director |
957-2130 |
| J. Leigh |
File No. 7-3886 |
Subject: 24(1)
We are responding to your memorandum of May 3, 1989, requesting our views on the taxability of a retainer to be paid by the 24(1) is of the view that there does not exist an employer/employee relationship between 24(1) and the recipients so as to characterize the payments as income form 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 24(1) can be considered as carrying on a business for profit or with a reasonable expectation of profit.
Our Comments
Based on the information presented we would agree that there would not appear to be an employer/employee relationship between 24(1) and the recipient. We are of the view, however, that the payments would be made pursuant to a contractual arrangement between 24(1) whether or not any document is formally signed.
Per diem allowances received by a 24(1) are not required to be included in income unless, as you noted above, the 24(1) can be considered as carrying on a business for profit or with a reasonable expectation of profit. Where the aggregate of such allowances in respect of a 24(1) would not have otherwise placed the recipient in a profit position, the addition of the 24(1) retainer would increase the likelihood of the recipient being required to include the amount in income.
We hope that our comments will be of assistance to you.
B.W. DathDirectorSmall Business and General DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch
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