7 November 1989 Income Tax Severed Letter AC74220 - Social Assistance Payments

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.

VICTORIA DISTRICT OFFICE                Head Office
Public Affairs Division                 Business and General
                                          Division
                                        J.A. Szeszycki
                                        (613) 957-2103
D.J. McGrath
Manager                                 7-4220

SUBJECT:  Social Assistance Payments
          Subnaragraph llO(1)(f)(iii) of the Act

We are responding to your memorandum of August 3, 1989, requesting our views as to whether, in the circumstances described in the enclosed. correspondence, the provisions of subparagraph 110(1)(f)(iii) of the Act would apply in respect of social assistance payments received.

One of the criteria for entitlement to a deduction under subparagraph 110(1)(f)(iii) is the requirement that the recipient reside with the individual, in respect of whom the payments are made, at the time the payments are made. This criteria was the subject of your previous memorandum dated January 25, 1989, to which we responded on March 31 using four examples illustrating the elements needed to be present in order for an individual living with another in the same housing structure to be considered residing with the other individual. Each of the examples used involved either the private family home of the care-givers or a facility in which the recipients lived on a full time basis. The determining factor under consideration was the physical arrangements of the home or facility as being indicative of the relationship between owners and residents.

Your August 3rd letter presents a different set of circumstances (as summarized below) which introduces a new element to the residency test. The facts of the situation described in your memorandum include

- the Ministry of Social Services and Housing provides homes designated for the care of children and young adults that are wards of the Province of British Columbia.

- the Ministry contracts with a married couple to operate the home as a group home. The couple are required by the contract to live in the house on a full-time basis.

- the contract permits the employment of a relief couple to regularly take the place of the contracting couple so that the latter can take a break from providing the constant supervision of wards that the contract requires. The typical relief schedule calls for the contracting couple to live in the house for ten or eleven days followed by a five-day break.

- the home, in the case described, is a large five bedroom home with four bedrooms on the upstairs level. The contracting couple occupy one of the upstairs bedrooms. The room contains the necessary office equipment and confidential records and, consequently, must be secured; however, the room is not self-contained. Other facilities such as kitchen, laundry and common entertainment rooms are shared with the other residents.

- the funding for the group home operation is provided in two parts: (1) a per diem, per child maintenance payment (currently $10.72) which covers clothing, food, personal hygiene products and allowances, and (2) a subsidy which covers major costs including home maintenance and utilities, school supplies and recreation expenses. The subsidy also covers wages for the relief couple and the contracting couple's fee for service. The current fee for service is $3050.00 per month, an amount which is shared between husband and wife.

- the contracting couple also own their own home, at which they normally reside during their regular relief breaks.

Our Comments

Many of the comments expressed in our.previous memorandum have application to this situation. Specifically, the description of the physical layout of the home appears to satisfy the criteria that the living quarters of the contracting couple must not be self-contained or distant from the other residents such that they can effectively isolate themselves from the other individuals living in the house. We presume that the same can be said for each of the residents in the home. The factor that..has not previously been considered is the predetermined periodic absences from the home by the contracting couple. It1 is our understanding that the employment of a relief couple is a requirement set out in the contract. We note that in the past similar contracts did not provide for such relief and the program experienced a frequency of "burn-out" among contracted care-givers. Consequently,the five day absences from the residence are mandatory, not a matter of choice. The relief couple are in the employ of the contracting couple and in that capacity fulfill all the requirements of the contract on behalf of the contracting couple in their absence, including the full-time residency requirement. It is our view, therefore, that under an arrangement as described in this memorandum, the contracting couple would be considered residing with the individuals placed in their care even though they may themselves be absent for regular five-day periods throughout the year.

for Director Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch

c.c.   L. Pulcine
       Enquiries and Taxpayer
         Assistance Division