24 October 1986 Income Tax Severed Letter

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.

MEMORANDUM

OCT 24 1986

PROVINCIAL & INTERNATIONAL RELATIONS DIVISION

ATTENTION R. D'Aurelio Director

SMALL BUSINESS AND GENERAL DIVISION D.Y. Dalphy 957-2134

XXXX

This is further to our (Toussaint/Dalphy) recent conversations and is in reply to your request of October 3, 1986, for an opinion regarding the tax treatment to members of amounts received by them for their services on the above-noted Committee. Specifically, you have requested our views in respect of two scenarios.

Certain members who are employees wish to continue to receive their regular income and related benefits from their employers. As such, they propose to endorse their per diem cheques to their employers. In our view, the amount of the per diem cheques would be included in the incomes of members when received by virtue of paragraph 6(1)(c) of the Income Tax Act (the "Act").

We considered whether the position described in paragraph 4 of Interpretation Bulletin 1T-377 would apply to this situation; as members are not "acting on behalf of or representing" their respective employers on the Commission, we concluded that this position cannot apply. Payments to members are made under the authority of the Department of Labour Act (R.S.A. 1980, c. D-24). Subsection 4(1) of this Act allows the Minister of Labour to establish boards, committees and councils and subsection 4(2) provides that the Minister of Labour may "authorize, fix and provide for the payment of renumeration and expenses to its members". Subsection 2(1) of the Labour Legislation Review Committee Order lists the names of the individual members and not the members' employers. No agency agreements (between members and their employers in respect of services to the Committee) exist. Based on the foregoing, we conclude that members are paid qua members for their services, and not as agents for their respective employers.

We also considered whether relief to members would be available via paragraph 8(1)(n) of the Act. It is our opinion that this paragraph of the Act, which provides for a deduction in respect of salary reimbursements, cannot apply to this particular arrangement for the endorsement of per diem cheques to the members' respective employers is not directly related to the members' salaries.

We understand that members are also contemplating receiving and keeping their per diem cheques and agreeing with their respective employers to salary reductions while serving on the Committee. In our opinion, members in these circumstances would include the amounts received as per diems and as salary in income. The amount of salary waived by employee/members would not however be included in computing their incomes.

We trust that this information will be of assistance to you in communicating with XXXX.

Director General Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch