Principal Issues: Whether employees of the World Anti-Doping agency are entitled to a tax deduction.
Position: Yes, if they meet the conditions set out in s. 110(1)(f)(iv).
Reasons: The World Anti-Doping Agency was added to Reg 8900(2) in 2003, effective for 2001 and subsequent years.
XXXXXXXXXX World Anti-Doping Agency Stock Exchange Tower 800 Place Victoria (Suite 1700) P.O. Box 120 2017-071780 Montreal (Quebec) H4Z 1B7 S.E. Thomson
August 14, 2017
Dear XXXXXXXXXX:
Re: Tax Deduction for Employees of the World Anti-Doping Agency
XXXXXXXXXX has asked us to write to you setting out our views of the income tax deduction that is available to employees of the World Anti-Doping Agency (“WADA”). Our comments deal with the Income Tax Act (the “Act”) and the Income Tax Regulations (the “Regulations”) only, and do not address the application of the Excise Tax Act (i.e. GST/HST) or the Canada Pension Plan or Employment Insurance legislation, or any taxes levied by the Province of Quebec.
In general, residents of Canada are taxable in Canada on their world income. Non-residents of Canada are taxable in Canada on certain types of Canadian-source income, including income from the duties of employment performed in Canada. This concept of “residence” refers to residence for income tax purposes, and is not generally linked to immigration status.
Since 2001, employees of WADA have been entitled to a deduction in computing taxable income for income from employment with WADA where certain conditions are met. Specifically, subparagraph 110(1)(f)(iv) of the Act provides as follows:
110. (1) Deductions permitted — 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 amount that is…
(iv) the taxpayer's income from employment with a prescribed international non-governmental organization, where the taxpayer
(A) was not, at any time in the year, a Canadian citizen,
(B) was a non-resident person immediately before beginning that employment in Canada, and
(C) if the taxpayer is resident in Canada, became resident in Canada solely for the purpose of that employment…
The prescribed international non-governmental organizations are listed in subsection 8900(2) of the Regulations, and include WADA. According to the regulations amending subsection 8900(2) (SOR/2003-83 [P.C. 2003-266] (2003/02/27), the Canada Customs and Revenue Agency (as it then was), the Department of Foreign Affairs and International Trade, Sports Canada, Montreal International and WADA were consulted with respect to the addition of WADA to the list in 2001.
Therefore, all employees who meet the conditions set out above are entitled to a deduction for their employment income paid to them by WADA. In completing the T1 Income and Benefits Return, the employment income should be included on line 101, and deducted again at line 256.
This deduction is available to employees only, and not to spouses or children of the employees, unless they are also employees of WADA and meet the conditions in subparagraph 110(1)(f)(iv) of the Act. Further, the deduction is available both to employees who are working in Canada under a temporary work visa and those with permanent residential status, as long as they are not citizens of Canada.
We trust that we have been of assistance. If you have further questions regarding the Act or the Regulations, please contact me at (613) 670-9000.
Yours truly,
Lori M. Carruthers
Section Manager
for Division Director
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
Cc: XXXXXXXXXX, WADA