29 January 1999 External T.I. 9833555 - SPECIALIZED FAMILY CARE

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: Are certain payments received for providing regular family care for children who cannot remain in their own homes?

Position: Insufficient information and completed or ongoing transaction.

Reasons: General information concerning the possible application of paragraph 81(1)(h) of the Act.

XXXXXXXXXX   			983355
J. E. Grisé
Attention: XXXXXXXXXX 

January 29, 1999

Dear Sirs:

Re: Specialized Family Care

This is in reply to your letter of December 10, 1998 requesting a written ruling on whether XXXXXXXXXX is taxable on amounts received from the British Columbia Ministry for Children and Families for providing home care for children.

The ruling you have requested is in respect of completed or ongoing transactions. As set out in Information Circular 70-6R3, Advance Income Tax Rulings (the circular), an advance income tax ruling can only be issued in respect of a definite transaction or transactions which a taxpayer is contemplating. Paragraph 22 of the circular states that requests for written opinions on completed transactions are normally considered by our tax services offices. However, we are prepared to offer the following general comments which may be of assistance to you.

Paragraph 81(1)(h) of the Income Tax Act provides an exemption from inclusion in computing the income of a taxpayer in respect of certain social assistance payments received by an individual. A social assistance payment will not be included in the income of an individual for income tax purposes, if all of the following conditions are met:

• The payments must be ordinarily made on the basis of a means, needs or income test.
• The payments must be made under a program provided for by federal or provincial law.
• The payments must be received directly or indirectly by the individual for the benefit of another individual (the “cared-for individual”).
• The cared-for individual cannot be the individual’s spouse or related to the individual or the individual’s spouse.
• No family allowance under the Family Allowances Act or any similar allowance provided for by provincial law can be payable in respect of the cared-for individual for the period for which the social assistance payment is made.
• The cared-for individual must live in the individual’s principal place of residence, or the individual’s principal place of residence must be maintained for use as the cared-for individual’s residence during the period for which the payments are made.

The above exemption can apply whether the payments received are business or employment income to the recipient.

We hope our comments are helpful.

Yours truly,

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

Enclosure

c.c.: Client Services
Northern B.C. and Yukon TSO
- 3 -

.../cont’d