9 November 1998 External T.I. 9824935 - PAYMENT TO XXXXXXXXXX

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: XXXXXXXXXX Agency provides payments to caregivers intended to provide support and living expenses for indivduals with developmental delays. Are the amounts taxable to the caregivers?

Position: Question of fact. It seems however that the amounts paid to the caregivers meet the requirement under 81(1)(h) "for the benefit of another individual"

Reasons: Requirement of 81(1)(h)

XXXXXXXXXX 982493
C. Tremblay

Attention: XXXXXXXXXX

November 9, 1998

Dear Sir;

Re: Payments to XXXXXXXXXX

This is in reply to your letter of June 29, 1998, concerning the taxable status of remuneration paid to individuals by your corporation (the “Agency”) who provide support in their homes for individuals with a developmental delay.

You indicate that the individuals are XXXXXXXXXX who receive remuneration from the Agency intended for the provision of support and living expenses (i.e. food, shelter, emotional support etc.) of the individual under their care. It is our understanding that no family allowance under the Family Allowances Act or any similar allowance provided for by provincial law is payable in respect of the cared-for individual and that the cared-for individual lives in the XXXXXXXXXX principal place of residence maintained for use as the care-for individual’s residence during the period for which the payments are made.

Our Comments:

Whether these payments are exempt under paragraph 81(1)(h) of the Act, which is the provision which exempts most foster care payments, is a question of fact. Generally, the payments will qualify for this exemption if they are received “directly or indirectly by the taxpayer for the benefit of another individual (other than the taxpayer’s spouse or a person who is related to the taxpayer or related to the taxpayer’s spouse) and the cared-for individual lives in the taxpayer’s place of residence.” In our view, based on the model contract description that you faxed us, amounts paid by the Agency for services by an individual rendered as a caregiver in his or her home, will be exempt under paragraph 81(1)(h) of the Act, provided the amounts paid by the Agency are required to be used for the cared-for individual’s benefit and cannot be used for the personal benefit of the individual providing the support.

We caution that our comments do not constitute advance income tax rulings and are based solely on the information given.

Yours truly.

J. F. Oulton, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislative Branch

- 2 -