Principal Issues: [TaxInterpretations translation] Can the taxpayer benefit from the deduction for Canadian Forces and police personnel by virtue of subparagraph 110(1)(f)(v) of the Income Tax Act?
Position: Question of fact.
Reasons: Two determinations are required. First, XXXXXXXXXXXXXX is considered a member of the Canadian Forces. Second, that the taxpayer is a member of the Canadian Forces in one of the missions referred to in subclauses 110(1)(f)(v)(A)(I) or (II).
March 3,2011
Jonquière Tax Services Office Headquarters Individual and Benefits Service, 541 Business and Partnerships Division A. Dagenais Attention: Marie-Éve Duchesne Advocate, M. Fisc. B.A.A. 2010-038728
Deduction for Canadian Forces and police personnel
This is in response to your e-mail of November 16, 2010, in which you requested our opinion on whether a taxpayer may benefit from the Canadian Forces and police personnel deduction under subparagraph 110(1)(f)(v) of the Income Tax Act (the "Act"). Your question follows a disagreement between the taxpayer and his employer on that issue.
Unless otherwise indicated, all legislative references in this document are to the provisions of the Act.
Specifically, you described a situation where a XXXXXXXXXXXX (the "taxpayer") in the Canadian Forces served as a military XXXXXXXXXXXX in two missions. From XXXXXXXXXXXX to XXXXXXXXXXXX, he was part of the XXXXXXXXXXXX operation, being mainly located XXXXXXXXXXXX but with multiple XXXXXXXXXXXXXXXX accreditations. From XXXXXXXXXXXX until his return to Canada, the taxpayer was stationed XXXXXXXXXXXXXX and participated in the XXXXXXXXXXXX operation. He also held multiple XXXXXXXXXXXXXXXX accreditations.
Operation XXXXXXXXXXXXXX had a level 3 risk premium while Operation XXXXXXXXXXXXXX had a level 2 risk premium.
You wish to know if the taxpayer is considered a member of the Canadian Forces and if the missions in which the taxpayer has participated qualify as either international operational missions or prescribed missions.
Our Comments
Subparagraph 110(1)(f)(v) reads as follows:
110 (1) For the purpose of computing the taxable income of a taxpayer for a taxation year, there may be deducted such of the following amounts as are applicable
[...]
(f) any social assistance payment made on the basis of a means, needs or income test and included because of clause 56(1)(a)(i)(A) or paragraph 56(1)(u) in computing the taxpayer’s income for the year or any amount that is
[...]
(v) the lesser of
(A) the employment income earned by the taxpayer as a member of the Canadian Forces, or as a police officer, while serving on
(I) a deployed operational mission (as determined by the Department of National Defence) that is assessed for risk allowance at level 3 or higher (as determined by the Department of National Defence),
(II) a prescribed mission that is assessed for risk allowance at level 2 (as determined by the Department of National Defence), or
(III) any other mission that is prescribed, and
(B) the employment income that would have been so earned by the taxpayer if the taxpayer had been paid at the maximum rate of pay that applied, from time to time during the mission, to a non-commissioned member of the Canadian Forces;
As a result, a deduction may be claimed by certain members of the Canadian Forces who have been assigned to high-risk or medium-risk missions outside Canada. Where this is the case, an amount is shown in Box 43 of a T4 slip and a deduction can be claimed on line 244. In this situation, the taxpayer's employer completed the T4 slip and found that the taxpayer did not meet some of the conditions necessary for that deduction.
Under the Act, it is the responsibility of the Department of National Defence to identify international operational missions that have a risk premium of level 3 or higher. As for the missions covered for the purposes of subclause 110(1)(f)(v)(v)(A)(II), they are provided for in section 7500 of the Income Tax Regulations (the "Regulations"). The Canada Revenue Agency therefore does not have the authority to make those determinations. Furthermore, in the situation you described to us, it would appear that the XXXXXXXXXXXX and XXXXXXXXXXXX operations in which the taxpayer participated are missions referred to for the purposes of subclause 110(1)(f)(v)(A)(A)(II).
Whether the taxpayer was a member of the Canadian Forces while participating in operations XXXXXXXXXXXXXX and XXXXXXXXXXXXXX is a question of fact. In our view, the question of whether someone is a member of the Canadian Forces must be resolved in light of the relevant provisions of the National Defence Act. It provides that a member of the Canadian Forces is an officer or non-commissioned member who is a member of the Regular or Reserve Force.
Access to Information
For your information, unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency's electronic library. 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 the taxpayer request a copy of this memorandum, they may request a severed copy using the Privacy Act criteria, which does not remove taxpayer identity. Requests for this latter version should be made by you to Ms. Celine Charbonneau at (819) 994-2898. In such cases, a copy will be sent to you for delivery to the taxpayer.
We hope that our comments are of assistance. If you require additional information regarding the content of this document, please do not hesitate to contact us.
François Bordeleau, Advocate
Manager
Business and Partnerships Division
Income Tax Rulings Directorate.