20 October 1995 External T.I. 9515555 - ALBERTA IRRIGATION DISTRICTS

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.

Principal Issues:

whether elected board members of irrigation districts incorporated under the Irrigation Act of Alberta qualify under subsection 81(3), i.e. are an "other similar body" as referred to in 81(3)(b)

Position:

After a review of the Municipal Government Act and the Irrigation Act for Alberta, a board member may be considered "an officer of a municiapl utilities board, commission or corporation or any other similar body". If any remuneration is to be exempted under 81(3) in respect of such member, the member must also meet the "elected by popular vote" criteria as discussed in response

Reasons:

		951555
XXXXXXXXXX	Sandra Short

Attention: XXXXXXXXXX

October 20, 1995

Dear Sirs:

Re: Subsection 81(3) of the Income Tax Act

This is in reply to your letter of June 12, 1995 which asks whether elected board members of organizations incorporated under the Irrigation Act of Alberta qualify under subsection 81(3) of the Income Tax Act (the Act). You have specifically asked whether board members of the irrigation districts may be considered officers of an "other similar body" as referred to in paragraph (b) of subsection 81(3) of the Act.

Board members are paid mileage for each meeting they attend and must submit mileage claims for these expenses. You have asked whether these amounts must be included in the total amounts received as calculated in paragraph 3 of Interpretation Bulletin IT-292.

In determining whether or not any remuneration or expense allowance is exempted under paragraph 81(3)(b) of the Act, the entity must be "a municipal utilities board, commission or corporation or other similar body, the incumbent of whose office as such an officer is elected by popular vote".

It is our general view that a board, commission, etc. that is established by a province is not one described in paragraph 81(3)(b) of the Act unless it can be considered to be a "similar body" for the purposes of paragraph 81(3)(b) of the Act. We are of the opinion that a board, commission, etc., established by a province can be considered to be a "similar body" provided it can be regarded as being akin or equivalent to a body established at the municipal level of government. In addition, if any remuneration is to be exempted under subsection 81(3) of the Act in respect of a member of a similar body, the member thereof must become such a member either by election by popular vote directly into the position, becoming a member ex officio because of an election by popular vote in some other body or by being elected by popular vote for the purposes of being appointed to a similar body.

We have reviewed the provisions of the Irrigation Act for the Province of Alberta and note the following:

1.An Irrigation Council (Council) consisting of not less than 7 members is appointed by the Lieutenant Governor in Council. Council appoints the first board of directors of a district.

2."Elected" means elected as a director at a general or special election of directors under Part 3 of the Irrigation Act. The only persons entitled to vote at an election of directors are individual water users of the district and individuals appointed as an agent for a corporation that is a water user.

3.Each district or irrigation district formed under the Irrigation Act has a board of directors the members of whom are a corporation. Except as otherwise provided, these members are elected. The board is a continuing body notwithstanding any election or appointment or any vacancies. Council has the power to dismiss a board, appoint a new board or appoint some members and direct the remainder to be elected. Replacement board members may be appointed or elected. In our telephone conversation of September 22 with XXXXXXXXXX (XXXXXXXXXX/Short), we were advised that all or almost all board members in the province are now elected.

4.The powers and duties of the board of directors include responsibility for the operation, maintenance and administration of the irrigation works of the district. The board may construct and replace irrigation works and repair, extend, alter, modify, dismantle or abandon any irrigation works. A board may carry on the functions of a supplier of water for irrigation purposes and is responsible for the supply and distribution of water to the water users of the district in accordance with the by-laws.

We reviewed the Municipal Government Act for the province of Alberta and note that subsection 252(1) provides that a municipal council may pass a by-law for the purpose of entering into an agreement with any irrigation district for a supply of water for irrigation purposes within the municipality. When a municipality enters into an agreement under this section it has all necessary power and authority to construct, maintain and operate any and all ditches, culverts and other works considered necessary for the conveyance of water along or across any street or public places within the municipality for the purpose of making water available for irrigation to any public or private land within the municipality.

The Municipal Government Act defines a public utility to mean any municipal revenue earning work or utility and includes a municipal irrigation system. Subsection 282(2) provides that a municipality may improve or extend a public utility and acquire all buildings necessary for this purpose. It may construct and maintain all reservoirs, waterworks etc. for a number of purposes including for the purpose of conveying water. Under subsection 305(1), a municipality is charged with regulating the distribution and use of water. Further, a municipal council may delegate any or all of its executive and administrative duties and powers to one or more municipal commissioners or to a municipal manager. We assume this to mean that a municipality may choose to appoint a commissioner or manager to regulate the distribution and use of its water which duties could include making water available for irrigation.

Based upon the observations noted above, it is our view that a board member of a district or irrigation district may be considered "an officer of a municipal utilities board, commission or corporation or any other similar body" for purposes of paragraph 81(3)(b) of the Act. If any remuneration is to be exempted under subsection 81(3) in respect of such member, the member must also meet the "elected by popular vote" criteria as discussed above.

A mileage or per kilometre allowance would be included in the calculation of income as a "mileage or other travelling allowance" referred to in paragraph 3 of Interpretation Bulletin IT-292 if the allowance is not based solely on the number of kilometres for which the vehicle is used in connection with or in the course of the office or employment. A per kilometre allowance which is paid in respect of travel costs incurred between home and the place of employment is considered to be in respect of personal travel thus such an allowance is included in income (paragraph 3(c) in Interpretation Bulletin IT-292).

We trust our comments will be of assistance to you.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Income Tax Rulings and Interpretations
Directorate
Policy and Legislation Branch

c.c. Client Assistance Directorate

Winnipeg T.C.

Edmonton Tax Services
Calgary Tax Services