18 November 1997 External T.I. 9719095 - TAXATION OF CONTRIBUTIONS

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.

RULINGS DIRECTORATE
CORRESPONDENCE SUMMARY

Principal Issues:

A retired member of the RCAF, a resident of Alberta, is obligated to pay health care premiums to the provincial government of Alberta (medicare). The Canadian Forces Superannuation fund rebates a percentage of the premiums paid to the retired member less any taxes withheld on account of income taxes. The issue is whether the rebate received is taxable.

Position TAKEN:

Rebate taxable pursuant to either subsection 6(3) or 56(1)(a) depending upon facts.

Reasons FOR POSITION TAKEN:

Income Tax Act and IT-247. Where an employer pays premiums for provincial health care plans that are the liability of the employee such payments are taxable. The payments are taxable to the individual to the extent that such amounts are paid by a former employer, whether pursuant to an employment agreement or from a superannuation fund, and regardless of whether they are paid directly to the province, are rebated to the individual or are paid in any other manner.

                                            	971909
XXXXXXXXXX	                                  	G. Donell

November 18, 1997

Dear Sir:

Re: Taxation Rebate received on Alberta Health Plan

We are writing in response to concerns you have raised with the Calgary Tax Services Office involving the taxation of an annual rebate you receive from the Canadian Forces Superannuation Department towards the Alberta health care premiums that you are obligated, as a resident of Alberta, to pay. In a telephone conversation of November 13th one of our officers, Mr.Gary Donell, discussed these concerns with you at length.

In summary the Department's position with respect to rebates, such as you have received, are outlined in IT-247. Health care premiums that are the liability of an individual and that are paid by a former employer, whether pursuant to an employment agreement or from a superannuation fund, are taxable to that individual regardless of whether they are paid directly to the province, are rebated to the individual or are paid in any other manner. In this regard the annual rebate you receive is properly included in your income and would still have been properly included in your income had the health care premiums been paid directly to the province of Alberta.

We hope that our comments have been of assistance.

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch