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: Whether the "T4 income" of members of a "communal organization," within the meaning of this term in section 143 of the Income Tax Act, may be reported on the T3 Trust Return filed by the communal organization.
Position: No.
Reasons: Section 143 of the Act applies to income which is derived from business, property or the other activities of a communal organization. It does not apply to any income received by a member of a communal organization in his or her own right.
January 8, 2001
XXXXXXXXXX TAXATION CENTRE HEADQUARTERS
Problem Resolution J. Gibbons, CGA
(613) 957-2135
Attention: XXXXXXXXXX
2000-005364
Employment Earnings of a Member of a Communal Organization
We are replying to your memorandum which was faxed to us on October 31, 2000, concerning an enquiry you received from an accountant. The accountant wishes to know whether the "T4 income" (i.e., employment income) of members of a "communal organization," within the meaning of this term in section 143 of the Income Tax Act (the "Act"), may be reported on the T3 Trust Return filed by the communal organization in the situation outlined below. If so, the particular members would receive T3 slips reporting their share of the communal organization's income; however, this share would be less than the amount of the T4 income.
Facts
1. XXXXXXXXXX.
2. XXXXXXXXXX qualify as communal organizations under section 143 of the Act.
3. The members of the XXXXXXXXXX (the "members") are not entitled to retain property or income rights.
4. All income and property is considered to be communal income and property.
5. XXXXXXXXXX file T3 Trust returns.
6. Income is distributed to the members according to the various rules established in the Act.
7. A number of the members are teachers, and some occasionally teach off of the colony (the "salaried teachers") and receive T4's for their employment income.
8. The employment income of salaried teachers may amount to $XXXXXXXXXX to $XXXXXXXXXX a year.
9. As the salaried teachers are members of the communal organization, they are not entitled to keep the employment income they earned while teaching off of the colony.
Our views
In our view, section 143 of the Act applies to income which is derived from business, property or the other activities of a communal organization. It does not apply to any income received by a member of a communal organization in his or her own right. Thus, it is our view that the members' income derived from teaching off the colony is taxable in the members' hands.
For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on the Agency's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version, or they may request a copy severed using the Privacy Act criteria, which does not remove client identity. Should you wish to send a severed copy to the client, you may obtain one by contacting Jackie Page at (613) 957-0682.
John Oulton, CA
Manager
Business, Property and Employment Income Section III
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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