22 January 2026 External T.I. 2025-1078871E5 - PSW Initiatives Program 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.

Principal Issues: Tax treatment of payments made to eligible PSWs through a government sponsored program.

Position: Payments are taxable as employment income.

Reasons: Where the government sponsors a program that is designed to have employers deliver payments to PSWs, the amount received is included in employment income under subsection 5(1).

XXXXXXXXXX 2025-107887
S. Trop

January 22, 2026

Dear XXXXXXXXXX:

Re: Ontario Payments to Attract New PSW Graduates to Long-Term Care and Home and Community Care Sectors

We are writing in response to your email dated September 17, 2025, wherein you asked about the tax treatment of payments to personal support workers (PSWs) under the Government of Ontario’s (Province) program to attract PSWs to work in long-term care homes as well as home and community care organizations (Program).

We understand that the payments to eligible PSWs under the Program include:

• Clinical Placement Stipend (Up to $5,440)
• Recruitment Incentive ($10,000)
• Rural, Remote and Northern Relocation Support ($10,000)
• Rural, Remote and Northern Community Incentive ($10,000)

Our comments

This technical interpretation provides general comments about the provisions of the Income Tax Act (Act) and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R12, Advance Income Tax Rulings and Technical Interpretations.

The tax treatment of the various payments provided in the above noted Program to eligible PSWs, is determined by the design of the Program and the manner in which the payments are delivered.

Where the Province sponsors a program that is designed to have employers deliver the above payments directly to PSWs, it is our view that the amount received by the PSWs would be included in their employment income under subsection 5(1) of the Act. The employer would be required to withhold income tax, Canada Pension Plan contributions, and Employment Insurance premiums when they make these payments, and report the gross payments and the withholdings on the employee’s T4 slip.

By contrast, where the Province sponsors a program that is designed to deliver the above payments directly to PSWs, it is our view that the amount received by the PSWs would be included in their income under subparagraph 56(1)(r)(i) of the Act. The Province would be required to withhold income tax when they make the payments and report the gross payments and withholdings on a T4A slip for each recipient.

You have indicated that the funding provided is paid by the Province to the employer. The employer then delivers the payments directly to the PSWs. Based on the facts provided, it is our view that the amounts received by the PSWs under the Program by their employer would be taxable under subsection 5(1) of the Act and reported on a T4 slip.

We trust these comments will be of assistance.

Yours truly,

Tom Baltkois, CPA, CGA
Manager
Business and Employment Income Section
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch