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:
Taxability of personal care allowance paid to claimant by XXXXXXXXXX Workers' Compensation Board
Position TAKEN:
Allowance is income pursuant 56(1)(v) and there is an offsetting deduction pursuant to subparagraph 110(1)(f)(ii) of the Act.
Reasons FOR POSITION TAKEN:
Pursuant to the XXXXXXXXXX Workers' Compensation Act "compensation" includes medical aid which is the subsection under which that personal care allowance is paid.
941476
XXXXXXXXXX D. Zion
August 9, 1994
Dear XXXXXXXXXX:
Re: Retroactive Workers' Compensation Board Payment
We are writing in response to your letter of June 1, 1994 and subsequent telephone conversation of August 4, 1994 (Zion/XXXXXXXXXX). You have asked whether the personal care allowance (allowance) you are now receiving from the XXXXXXXXXX Workers' Compensation Board (WCB), as well as a retroactive payment of the allowance, is taxable.
As we understand it, the personal care allowance was previously paid by the XXXXXXXXXX WCB directly to your attendant. You are now paid the allowance directly and are required, in turn, to pay the attendant for the services. You have been advised that as the attendant's employer you are responsible for deducting and remitting the employee's Canada Pension Plan (CPP) contributions, Unemployment Insurance (UI) premiums and income tax, as well as the employer's share of the CPP contributions and UI premiums.
The retroactive and periodic payments you receive in respect of your attendant's allowance represents "compensation" for the purposes of paragraph 56(1)(v) of the Income Tax Act (S.C. 1970-71-72, c.63 as amended, consolidated to June 1993 (the Act)). They should be included in your income for tax purposes under that provision in the year received. You will be entitled to an offsetting deduction under subparagraph 110(1)(f)(ii) of the Act. The amount of salary paid to your attendant will be subject to tax in the attendant's hands as employment income under subsection 5(1) of the Act.
We trust our comments will be of assistance to you.
Yours truly,
J.A. Szeszycki
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch
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