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:
1. The tax treatment of payments to be made to parents and guardians by Ontario School Boards, as a result of the recent action of the Province's teachers.
2. Has the deadline for making charitable donations for 1997 been extended, as many parents have expressed an interest in donating some or all of the payments to be received from the Ottawa Board of Education?
Position TAKEN:
1. The payments will not be subject to income tax and will not reduce the deduction for child care expenses that a taxpayer may claim.
2. Donations (of cash, cheque, credit card, money order or tangible property, other than real estate) made in January 1998 by individuals may be considered, at the individual's option, as having been made in 1997. The parents and guardians wishing to make donations to their school boards should ensure that the school boards are in fact registered charities for purposes the charitable deduction or credit.
Reasons FOR POSITION TAKEN:
1. The compensation to be received by Ontario parents and guardians is not income from a source for purposes of the Act. In addition, these payments are not "a reimbursement or any other form of assistance" in respect of child care expenses.
2. The extension of the deadline for 1997 donations was announced in a News Release (no.97-115) dated December 8, 1997, issued by the Minister of Finance and the Minister of National Revenue.
Boards of education, established pursuant to the Ontario Education Act, generally qualify as charities and as such may register with the Department for purposes of the deduction or credit in respect of charitable gifts (position taken in other files - the powers, duties, school purposes and activities of boards of education, established pursuant to the Ontario Education Act, would bring the purposes and activities of these boards within the meaning of "the advancement of education").
5-973372
XXXXXXXXXX M. Azzi
Attention: XXXXXXXXXX
January 16, 1998
Dear Madam:
Re: Payments to Parents and Guardians in Relation to the Ontario Teachers' Action
This is in reply to your letter of December 19, 1997, wherein you requested our views on the tax treatment of payments to be made to parents and guardians by Ontario School Boards, as a result of the recent action of the Province's teachers. You also requested confirmation that the deadline for making charitable donations for 1997 has been extended, as many parents have expressed an interest in donating some or all of the payments to be received from the Ottawa Board of Education.
Pursuant to legislation enacted by the Government of Ontario, the school boards will provide parents or guardians of eligible children with payments of $40.00 per day for each school day on which they were disadvantaged by the teachers' action. An eligible child is an elementary or secondary school student who, on October 27, 1997, was either under age 14 or, by reason of disability, required special care or supervision, or a child who, on October 27, 1997, was registered in a child care facility located on school premises. These payments will not be reimbursements of child care expenses, or any other expense, and there will be no requirement that any expense be incurred in order to receive such payments.
The Income Tax Act (the "Act") taxes income by source, such as employment, business and property. Since the compensation to be received by Ontario parents and guardians is not income from a source for purposes of the Act, it will not be subject to income tax. In addition, these payments will not reduce the deduction for child care expenses that a taxpayer may claim, as the payments are not "a reimbursement or any other form of assistance" in respect of child care expenses.
In accordance with a News Release dated December 8, 1997, issued by the Honourable Paul Martin, Minister of Finance, and the Honourable Herb Dhaliwal, Minister of National Revenue, as a result of the recent postal strike, donations made in January 1998 by individuals may be considered, at the individual's option, as having been made in 1997. This special measure applies to donations made by cash, cheque, credit card, money order or tangible property, other than real estate, to a qualified donee. A qualified donee is any person who is entitled to issue receipts for charitable donations, such as a "registered charity." In this regard, it should be noted that it is our view that boards of education, established pursuant to the Ontario Education Act, generally qualify as charities and as such may register with the Department for purposes of the deduction or credit, under the Act, in respect of charitable gifts. The parents and guardians wishing to make donations to their school boards should therefore ensure that the school boards are in fact registered charities for purposes this deduction or credit.
We trust that these comments will be of assistance.
Yours truly,
John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
.../cont’d
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