Principal Issues: Whether a nominal meal allowance or stipend paid to volunteers who receive no remuneration for services provided has to be reported in an information return by the XXXXXXXXXX .
Position: Question of Fact
Reasons: Generally, compensation in excess of a nominal amount paid to a volunteer in the service of some other person would constitute employment income for purposes of the Act. However, nominal amounts paid or reimbursed to volunteers to account for the cost of travel to the location where they volunteer or a meal while volunteering, would generally not be regarded as taxable employment income if that is the only amounts received by the individual. For an individual who is also receiving tips and gratuities, the stipend, tips and gratuities are taxable employment income.
D Tiu XXXXXXXXXX (613) 957-8961 2006-017801 September 14, 2006
XXXXXXXXXX:
Re: Stipend Paid To Volunteers Of XXXXXXXXXX
We are writing in response to your March 27, 2006 inquiry on the above subject and further to our subsequent telephone discussions (XXXXXXXXXX/Tiu). You inquired whether a nominal meal allowance or stipend paid to volunteers who receive no remuneration for services provided has to be reported in an information return by the XXXXXXXXXX. You indicated that the majority of the hundred or so branch offices of the XXXXXXXXXX across Canada, including the licensed premises, operate almost exclusively by volunteer help. Volunteers are paid a meal allowance or stipend of $XXXXXXXXXX of service. You also indicated that it would be rare that tips or gratuities are given to volunteers who work in the licensed premises.
Written confirmation of the tax consequences inherent in a particular transaction or series of transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R5. In any event, a request cannot be considered for a ruling when the transactions are completed or where the issues involved are primarily questions of fact. Notwithstanding the foregoing, we are prepared to provide the following general comments.
The term "volunteer" is not defined for purposes of the Income Tax Act (the "Act"); consequently, one must rely on the ordinary meaning of the term. Other than subsection 81(4) of the Act, which provides an income tax exemption for the first $1,000 of employment income received by an individual from a government, municipality or other public authority for duties performed as a volunteer in certain emergency situations, there is currently no provision in the Act that specifically provides an income tax exemption for amounts received for services rendered by a "volunteer". Consequently, where compensation, in excess of a nominal amount is paid to such an individual in the service of some other person, it is our general view that the amount of such compensation would constitute employment income for purposes of the Act.
Nominal amounts paid or reimbursed to volunteers to account for the cost of travel to the location where they volunteer or a meal while volunteering, would generally not be regarded as taxable employment income if that is the only amounts received by the individual. For an individual who is also receiving tips and gratuities from XXXXXXXXXX patrons, it is our view that the stipend, tips and gratuities are taxable employment income.
Yours truly,
Randy Hewlett
Section Manager
For Division Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch