24 April 1987 Income Tax Severed Letter 5-2772 - [Special Support Allowances]

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.

XXXX

D.Y. Dalphy Tel: (613) 957-2134

April 24, 1987

Dear Sirs:

Re: Special Support Allowances

This is in reply to your letter of January 27, 1987 and is further to our XXXX (Fuoco/Dalphy) meeting of January 29, 1987 and our (XXXX /Dalphy) telephone conversation of March 3, 1987 concerning the above-noted allowances.

These special support allowances are provided to individuals in order to assist them in paying a portion of their costs relating to child care, transportation and/or accommodation so that they may more readily and fully participate in the Ministry's training programs. In particular, these allowances are provided to disadvantaged persons who without such support, would have difficulty in taking advantage of opportunities in the Ontario Skills, Trades updating and Ontario Basic Skills programs. Although candidates must complete the Trainee Declaration of Need and Application Form, they need not undergo a means test. It appears that these allowances are not paid under the National Training Act.

Our understanding of the aforementioned programs is as follows:

1. Ontario Skills Program

This program encourages small and medium sized employers in all economic sectors to initiate or undertake additional training by providing partial support to employers for the direct costs of concentrated, job-related training. The Ministry expects that this support will increase the productive capacity of the labour force in Ontario and will enhance the employability of workers. These training courses may range from 6 to 350 hours each and an individual trainee will not be able to receive a special support allowance for training that is conducted during the employee's normal working hours at his or her place of employment. In our aforementioned telephone conversation you provided us with two examples of such training:

1) an employer may send one of its employees to XXXX for two days,

2) an employer may send an employee to a community college to undergo a week of training (the teacher may be a college employee or the teacher may be brought to the college by the employer).

2. Trades Updating Program

These courses are intended for tradespersons and applicants must hold an Ontario Certificate of Apprenticeship, an Ontario Certificate of Qualification, or the equivalent (in some cases documentation of practical work experience will be accepted). Training Delivery Agencies (CHATS, labor unions, business establishments, etc.) will refer applicants to nearby training sites when their own courses are filled and they are accountable to the Ministry for the delivery of quality training. Each course provides a maximum of 60 hours of training and trainees are to be tested to assess their acquisition of skills in a course. Where appropriate, certification will be mailed to course graduates.

3. Ontario Basic Skills Programs

The purpose of this program is to broaden accessibility to training by raising the literacy/numeracy level of the educationally disadvantaged as these skills relate to the workplace. In addition to increasing literacy/numeracy, program objectives include increasing the participation of groups which are traditionally under-represented in training and encouraging women to gain an awareness of and secure entry into training programs and occupations generally regarded as non-traditional for women. This program will provide intensive instruction to upgrade academic skills from the level of basic literacy through to the equivalent of grade 12. Also, academic learning will be interspersed, as appropriate to the individual, with career and technical skills exploration, including "hands-on" exposure to computers, shop tools and machinery. In addition, academic learning will be augmented by the acquisition of study, problem solving and work adjustment skills and some trainees will participate in training readiness or job search components. The normal program duration is expected to be 400 hours.

4. Taxation of Special Support Allowances

Based on the foregoing, we are of the opinion that amounts provided as special support allowances in respect of the Ontario Skills Program would be included in the income of employees/trainees as income from employment. Further, it is our view that amounts provided as special support allowances in respect of the Trades Updating and the Ontario Basic Skills programs will be included in the income of trainees pursuant to paragraph 56(1)(n) of the Income Tax Act (the "Act") to the extent that a trainee's scholarship or bursary income in a taxation year exceeds $500.

5. Child Care Expenses

Although persons who incur child care expenses so that they may participate in training courses (other than those in respect of which a training allowance is paid under the National Training Act) are not entitled to deduct such amounts from their respective incomes, persons who incur child care expenses to enable them to perform the duties of an office or employment may be entitled to a deduction pursuant to section 63 of the Act. That is, persons who incur expenses for child care so that they may participate in the Trades Updates or the Ontario Basic Skills programs would not be entitled to a deduction in computing income in respect of these expenses; however, persons who incur child care expenses to enable them to take part in the Ontario Skills Program may be entitled to the child care expense deduction and as such, they may wish to contact their local District Taxation Offices in this regard.

6. Education Deduction

Trainees who are enrolled in programs that are of not less than 3 consecutive weeks duration may be able to take advantage of the educational deduction provided for in paragraph 110(1)(g) of the Act. At our aforementioned meeting we provided you with a copy of Interpretation Bulletin IT-224R3 , which describes in detail the requirements of this paragraph of the Act. With regard to the certification by the Minister of Employment and Immigration referred to in paragraph 1 of this Interpretation Bulletin, you may wish to contact Mr. Z. Leblanc at (613) 994-3787.

7. Withholding

You have enquired whether, with regard to the Ontario Basic Skills Program, colleges may "postpone making the income tax-deductions on the SSA allowances until a student has completed his/her training". Amounts that are subject to withholding are listed in section 153 of the Act and we advise that amounts included in income pursuant to paragraph 56(1)(n) of the Act are not included in this list. Questions that you may have in respect of withholding requirements may be presented to the Source Deductions section of the Toronto District Taxation Office which is located at 36 Adelaide Street East, Toronto, Ontario, M5C 1J7. Mr. Pat Doherty, the chief of this section may be contacted at (416) 973-3709.

8. Allowances for Transportation

You have asked whether a travel allowance would be subject to taxation where a community college provides a transportation service to the campus and charges students for this service. In our aforementioned telephone conversation you advised that, in some situations, the trainee's travel allowance would be credited to the college and the trainee would receive a chit indicating that the trainee's allowance bas been applied to pay for a college transportation service. Based on this information, it is our opinion that such amounts would be included in a trainee's income as discussed above (Taxation of Special Support Allowances).

We hope this information will assist you and, as we indicated at our aforementioned meeting, we would be pleased to provide you with comments on your proposed draft brochure for trainees. Please do not hesitate to contact the writer or your local District Taxation Office if you have further questions.

Yours truly

for Director Small Business & General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch

c.c.: Enquiries & Office Examination Toronto District Taxation Office