16 April 1992 Internal T.I. 9208417 F - Social Assistance Payments For Group Home Operators

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.

April 16, 1992

24(1)   DISTRICT OFFICEPersonal and GeneralChief of Enquiries Section

Attention:  24(1)

Social Assistance Payments received by Group Home Operators

We are replying to your facsimile transmission of March 19, 1992 requesting clarification of the tax implications of new paragraph 81(1)(h) of the Income Tax Act.

You describe the following two separate situations:

1.     A disabled person lives in a group home and pays a group home operator an amount for room and board from the monthly social assistance cheque received from the Ministry of Community and Social Services.  In addition, the group home operator receives a per diem subsidy from the Ministry of Community and Social Services or from an agency.

2.     The Ministry of Community and Social Services pays an amount to the Canadian Mental Health Association calculated on a per diem basis and the Association in turn pays a per diem subsidy to group home operators for room and board for the disabled individuals under their care.

You also submitted a letter from the Ministry of Community and Social Services which states that all payments to "Family Home Operators" which are made from a client's social assistance cheque for room and board will be non-taxable as a result of the 1991 change in legislation.

You ask whether the amounts received by a group home operator in the situations you describe are exempt from income by reason of paragraph 81(1)(h) or whether the amounts should be considered as business income to the operator and included in the operator's income net of any related expenses.  You indicate that most operators run their group home as a business for profit and have no other source of support.

The general intent of new paragraph 81(1)(h) is to exempt from income those social assistance payments which are made to individuals such as group home operators on behalf of the individuals under their care.  Social assistance payments for disabled individuals may be made directly to the home operator, to the home operator through an agency such as the Canadian Mental Health Association or directly to the disabled person who is in turn required to pay the home operator.

In order for a payment to qualify for the exemption under paragraph 81(1)(h), the following five criteria must be met:

1.     The payment is made to an individual other than a trust.

2.     The payment represents a social assistance payment (other than a prescribed payment of which there are none as of the date of this memorandum) which is ordinarily made on the basis of a means, needs or income test under a program provided for by an Act of Parliament or a law of a province.  An example of a payment not made on the basis of a means, needs or income test but which is ordinarily made on such a basis is the rent paid to a group home operator by a disabled person out of the social assistance received by that disabled person.  Such an amount would be considered to have been made on a means, needs or income test if a portion of the payment for room and board had been paid directly to the home operator.

3.     The payment is received directly or indirectly by the individual for the benefit of another person (other than a person who is cohabiting in a conjugal relationship with the individual or who is related to the individual or to the person with whom the individual is cohabiting in a conjugal relationship).

4.     No family allowance or similar allowance is received in respect of the person on whose behalf the payment was received for the period of time in respect of which the social assistance payment is being made.

5.     The individual in respect of whom the payment was made resides in the recipient's principal residence or the recipient's principal place of residence is maintained for use as the residence of that other individual, throughout the period during which the social assistance payment is being made.

While we cannot provide a definite answer to your questions without an examination of the details of the program under which the payments are being made and the living arrangements of the individuals concerned, it is our view that the payments to the group home operators described in your query may well be excluded from income by reason of paragraph 81(1)(h) of the Act.  If the amounts are excluded from income, the home operator would not be entitled to claim expenses in respect of related expenses by reason of paragraph 18(1)(c) of the Act.

While the letter from the Ministry of Community and Social Services may be misleading if there are cases where the criteria for exemption are not met, we are reluctant to offer any comments without a review of the SIL/Family Home guidelines mentioned in their letter.

P.D. FuocoSection ChiefPersonal and General SectionBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch

c.c.  Client Assistance Directoratec.c.  Assessment of Returns Directorate