23 September 1998 External T.I. 9824455 - METIS CITIZENS RECEIVING EMPLOYMENT TRAINING

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: Correction of technical interpretation #E9727895. Taxation

of training benefits being received by Metis and funding is section 63 of the EI Act.

Position: These payments are taxable regardless of whether they relate to a course or program designed to facilitate the re-entry into the labour force.

Reasons: These payments are taxable under paragraph 56(1)(r) which was introduced in Bill C-28 and received royal assent on June 18, 1998. Paragraph 56(1)(r) of the Act subjects to tax various training-related amounts. Specifically, this paragraph includes in a taxpayer’s income financial assistance received under part II of the Employment Insurance Act, as well as similar financial assistance received from a government or government agency under the terms of an agreement with the Canada Employment Insurance Commission.

		5-982445
XXXXXXXXXX 	Karen Power, CA
(613) 957-8953
Attention:  XXXXXXXXXX 

September 22, 1998

Dear Sirs:

Re: Taxability of Payments made to Metis citizens receiving employment training

We are writing to advise you of the following correction to our technical interpretation letter to you dated January 23, 1998 concerning the above-noted subject matter.

We have re-examined the treatment of payments under the Purchase of Training Benefit to recipients funded under the Employment Insurance (“EI”) Act. We are now of the view that such payments would be taxable under paragraph 56(1)(r) of the Income Tax Act (the “Act”). This paragraph was included in Bill C-28, which received Royal Assent on June 18th, 1998. This amendment is retroactive to June 30, 1996, the date of coming into force of the EI Act and Revenue Canada will apply the amendment beginning with the 1997 tax year.

Paragraph 56(1)(r) of the Act subjects to tax various training-related amounts. Specifically, this paragraph includes in a taxpayer’s income financial assistance received under Part II of the Employment Insurance Act, as well as similar financial assistance received from a government or government agency under the terms of an agreement with the Canada Employment Insurance Commission. As a result, recipients of financial assistance under Part II EI programs will be taxed regardless of whether the payments have been made directly by the federal government, a province or an organization under a devolution agreement.

We apologize for any inconvenience.

Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

		.../cont'd