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.
922139
A. Humenuk
24(1) (613) 957-2134
September 9, 1992
Dear Sirs:
Re: Employees of Social Service Agencies
We have been asked by the 24(1) District Office to write to you concerning recent amendments to the Income Tax Act (the "Act") concerning social assistance payments received by third parties for the benefit of some other individual.
Paragraph 81(1)(h) was added to the Act to clarify that certain payments to caregivers were exempt from taxation. In particular, this provision exempts from taxation
"a social assistance payment (other than a prescribed
payment) 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, to the extent
that it is received directly or indirectly by the
taxpayer for the benefit of another individual (other
than a person who is cohabiting in a conjugal
relationship with the taxpayer or who is related to the
taxpayer or to such a person) if
Document Disclosed Pursuant to The Access To Information Act Document Divulgué en vertu de la loi sur l'accès à l'information
- i) no family allowance under the Family Allowances Act or any similar allowance under a law of a province that provides for payment of an allowance similar to the family allowance provided under that Act is payable in respect of the other individual for the period in respect of which the social assistance payment is made, and
- ii) the other individual resides in the taxpayer's principal place of residence, or the taxpayer's principal place of residence is maintained for the use as the residence of that other individual, throughout the period referred to in subparagraph (i);"
where the payment is received by an individual other than a trust. We have been asked which payments, if any, to caregivers who are employees of the non-profit organizations which belong to your association would be exempt from taxation under this provision.
24(1)
These organizations fulfil this responsibility in part through employees who provide care for the children in their homes. These individuals receive both salary and benefits commensurate with their duties as well as payments for the room and board of the children under their care.
In the case of salary and employment-related benefits, the amounts are not considered received "for the benefit of" the child. These are amounts to which the caregiver is entitled by reason of having performed the service required under the contract of employment. Accordingly, these payments are subject to tax under subsection 5(1) rather than being exempt under paragraph 81(1)(h) of the Act.
On the other hand, it is our view that a payment for the child's room and board will not generally be included in the employee's income. Depending on the nature of the payment, it may be excluded by reason of paragraph 81(1)(h) of the Act or it may be excluded as being a reimbursement of expenses which are properly that of the employer.
Document Disclosed Pursuant to The Access To Information Act Document Divulgué en vertu de la loi sur l'accès à l'information
Where the payment is unreasonable in relation to the expenses incurred on behalf of the child, however, the amount will be included in the employee's income as remuneration.
We understand from the District Taxation Office that you intend to circulate the above noted information to your members. We ask that you ensure that your members are aware that the above noted comments are general in nature only and are not binding on the Department. In this regard, we note that the determination of the nature of any particular payment involves a finding of fact and, as such, a definitive comment on any particular situation cannot be made without a complete review of the circumstances and documentation. If one of your member organizations is unsure of the proper characterization of a particular payment made to its employees, it should contact the local district taxation office.
We trust our comments will be of assistance to you.
Yours truly,
P.D. Fuoco
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
- c. c. 19(1) District Office c.c. Assessment of Returns Directorate c.c. Client Assistance Directorate
Document Disclosed Pursuant to The Access To Information Act Document Divulgué en vertu de la loi sur l'accès à l'information
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1992
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1992
Email this Content