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: Do persons described at paragraph 81(3)(c) include persons appointed by a public school board as employees of the board but who are not members of the board.
Position: No.
Reasons: Paragraph 81(3)(c) states that the person must be a member of the board. The relevant School Act must be examined for an explanation of how someone becomes a member of the board.
XXXXXXXXXX 5-983379
David Shugar
Attention: XXXXXXXXXX
February 9, 1999
Dear Sir:
Re: Technical Interpretation on Subsection 81(3)
This is in reply to your letter of December 14, 1998 in which you requested our interpretation of subsection 81(3) of the Income Tax Act (the “Act”) as it relates to the ‘Superintendent’ and ‘Secretary-Treasurer’ positions for Alberta School Boards.
Your question is whether the Superintendents and Secretary-Treasurers, who are employed and appointed by school boards under sections 94 and 96 of the School Act (Alberta), are entitled to receive non-taxable allowances under subsection 81(3).
In your view, the individuals should be entitled to receive such non-taxable allowances since they are key persons who participate in governing the particular school district and the governing functions are specifically legislated by statute. You also state that although the positions are employment positions and not elected positions, the absence of any requirement in paragraph 81(3)(c) for the recipient of the non-taxable allowance to be elected means that the provision is intended to focus on those individuals who govern a particular school district’s operation.
Subsection 81(3) states:
Where a person who is
(a) an elected officer of an incorporated municipality,
(b) an officer of a municipal utilities board, commission or corporation or any other similar body, the incumbent of whose office as such an officer is elected by popular vote, or
(c) a member of a public or separate school board or similar body governing a school district,
has been paid by the municipal corporation or the body of which the person was such an officer or member (in this subsection referred to as the person's “employer”) an amount as an allowance in a taxation year for expenses incident to the discharge of the person's duties as such an officer or member, ….”
In our view, the person described in paragraph 81(3)(c) does not have to be elected to the board but does have to be a member of the board. This is reflected in Paragraph 2 of Interpretation Bulletin IT-292 as follows: “Subsection 81(3) also applies to an elected officer of a school board or district, a municipal utilities board, a municipal commission or corporation or any other similar body, and for 1974 and subsequent years, a member of a public or separate school board or similar body governing a school district”.
We agree with the comment in your letter that the position of ‘Superintendent’ and ‘Secretary-Treasurer’ are employment positions. Subsection 97 of the School Act (Alberta) states that the persons referred to in subsection 94 and 96 of the School Act (Alberta) are employees of the Board. Although subsection 94(2) of the School Act (Alberta) states that the Superintendent is the chief executive officer of the board, the provision does not state that he is a member of the board.
The appropriate legislation determines how board members are selected. Section 218 of the School Act (Alberta) states that the Minister of Education specifies the number of trustees to be elected to the board. Section 220 states that the Minister of Education may appoint a trustee or cause an election to be held. Section 222 states that if a vacancy occurs the board can fill the position by holding a by-election. These provisions do not permit the ‘Superintendent’ and ‘Secretary-Treasurer’ to be included as board members.
Regarding your comment that the ‘Superintendent’ and ‘Secretary-Treasurer’ should receive the non-taxable allowance because they occupy key positions that are legislated by statute, in our view, that is not a factor in determining whether they meet the conditions of paragraph 81(3)(c). We also disagree with your comment that the absence of a requirement in paragraph 81(3)(c) for the recipient to be elected means the provision is intended to focus on individuals who govern a particular school district. In our view, the wording of the paragraph is clear and applies only to a member of the board. The wording is intended to include persons who became board members by processes other than election.
In addition, in order for an allowance to be non-taxable by virtue of subsection 81(3) it must be received “… for expenses incident to the discharge of the person’s duties as such an officer or member, …”. The appropriate legislation would describe the duties of a board member and an allowance must be in respect of those duties. However, the duties of the Superintendent, as an employee of the board, are described in subsections 94(3) to (5) of the School Act (Alberta) and are the duties of an employee rather than a board member. Accordingly, subsection 81(3) would not apply to an allowance paid to the Superintendent.
If a board member were appointed as Superintendent and occupied both positions simultaneously, any allowance received would have to be identified as being in respect of either expenses incident to the discharge of the duties as a member of the board or in respect of the duties of the Superintendent.
The above comments apply equally to the position of Secretary-Treasurer.
We trust our comments will be of assistance to you.
Yours truly,
Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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