Principal Issues: [TaxInterpretations translation] 1. Does a payer have to report on a prescribed form different expense reimbursements paid to a person under a services contract?
2. Must the amount paid as GST and QST be included on the prescribed form?
Position: 1. Yes. 2. Yes.
Reasons: 1. Any reimbursement for expenses related to the provision of a service is a source of income from a business or property and must be reported on the prescribed form referred to in subsection 200(1) of the Income Tax Regulations.
2. The GST amount, and consequently the QST amount, must be included in the prescribed form referred to in subsection 200(1) of the Income Tax Regulations.
2007-023011 XXXXXXXXXX Lucie Allaire, Advocate, CGA January 31, 2008
Dear Sir,
Subject: Obligation to file slips for reimbursement of expenses paid to a person under a service contract
This is in response to your letter of April 2, 2007 asking whether a payer must file an information slip under subsection 200(1) of the Income Tax Regulations (the "ITR") in respect of expense reimbursements under a service contract. You were also asking whether or not to include the amount of GST and QST.
Our Comments
The situation described in your letter is an actual situation involving taxpayers. As stated in paragraph 22 of Information Circular 70-6R5 dated May 17, 2002, it is our practice not to issue written opinions on proposed transactions otherwise than by way of advance rulings. Furthermore, when it comes to determining whether a completed transaction has received appropriate tax treatment, that determination is made first by our Tax Services Offices. However, we can offer the following general comments that we hope may be helpful to you. These comments may, however, under certain circumstances, not apply to your particular situation.
Subsection 200(1) of the ITR provides that every person who makes a payment described in subsection 153(1) the Income Tax Act (the "Act") must make an information return in prescribed form in respect of the payment unless an information return in respect of the payment has been made under sections 202, 214, 237 or 238 of the ITR. Paragraph 153(1)(g) provides that every person paying at any time in a taxation year fees, commissions or other amounts for services, other than amounts described in subsection 115(2.3) or 212(5.1) of the Act, shall deduct or withhold from the payment the amount determined in accordance with prescribed rules and shall, at the prescribed time, remit that amount to the Receiver General on account of the payee’s tax for the year under Part I or Part XI.3.
In that regard, fees as well as reimbursements for automobile, meal or other expenses received as consideration for the performance of services, including GST and QST amounts, are payments described in paragraph 153(1)(g). Where a recipient of amounts referred to in that paragraph receives consideration for services rendered, there is a source of income for the purpose of earning income from a business or property. Paragraph 153(1)(g) of the Act uses the term "fees, commissions or other amounts for services", which is broad enough to encompass all cases where amounts have been paid for services rendered by a self-employed person.
For more information on a payer's responsibilities to issue slips, refer to Guide RC4157, Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary--2007. The Canada Revenue Agency's administrative position is that a payer must issue a T4A slip where the total of all payments in the calendar year was more that $500 or if an amount of tax has been withheld.
These comments are not advance income tax rulings and, as stated in paragraph 22 of Information Circular 70-6R5 dated May 17, 2002, are not binding.
Best regards,
Randy Hewlett
Manager
Business and Partnerships Section
Business and Partnerships Division
Income Tax Rulings Directorate.