16 January 1995 Internal T.I. 9500277 - TAGS PROGRAM

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

							January 16, 1995

St. John's District Office		Head Office
	Attention:  Joelle Barriault		Rulings Directorate
	            A/District Manager 	A.M. Brake
	            of Communications 	(613) 957-8953

							950027

The Atlantic Groundfish Strategy (TAGS) Program

This is in reply to your fax of January 9, 1995 and our recent discussions relative to the various questions set out in the documentation submitted. As agreed in our telephone conversations, the answer to your questions will depend solely on the treatment accorded the payments and to this extent we will deal only with that aspect of your referral.

Section 56 of the Income Tax Act (the "Act") requires that certain amounts be included in computing the income of a taxpayer for a taxation year. Specifically, subparagraph 56(1)(a)(vi) states,

"except to the extent otherwise required to be included in computing the taxpayers' income, a prescribed payment...".

The TAGS payment is such a prescribed payment and the question to be answered is whether the TAGS payment is required to be included in the computation of income by virtue of some other provision of the Act? In this case section 9 and/or 28 of the Act as representing self-employed earnings.

The Northern Cod Adjustment and Recovery Program (NCARP") was established to provide benefits to self-employed fishery workers as well as employees working in the fishing industry. Self-employed persons, considered to be earning income from business, in receipt of these payments, were required to report these payments as a business receipt in computing their business income for the year. These same self-employed persons who now qualify under the TAGS program will continue to receive amounts for the same reason as replacement income as a result of their discontinuance, interruption or loss of opportunity to earn self-employed fishing income. Such amounts would continue to be included in the computation of business income and would, therefore, not fall within the ambit of subparagraph 56(1)(a)(vi). In the event that a particular individual undertakes other activities, it is likely that it would cause him to lose his benefits. However, other activities carried on by an individual, that would not cause him to lose his benefits, would not change the nature of payments being received by former self-employed persons.

We hope that you will find our comments helpful.

R. Albert
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch