Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
can a registered political party was donated funds to pay personal expenses of elected official? Does the payment of a personal amount confer a taxable benefit on the elected official?
Position:
reasonable travel expenses of elected officials represent normal operating expenses when the amounts reasonably relate to the carrying out of the party's activities. A payment or personal benefit of any kind, from a political party to an elected official, is a taxable benefit unless the amount represents a reimbursement of an amount incurred in the performance of the memeber's official duties. In determining whether there is a taxable benefit, the same criteria is applied to politicians as to all other taxpayers.
Reasons:
MINISTER/DEPUTY MINISTER'S OFFICE 96-06766M
ADM'S OFFICE
RETURN TO 15TH FLOOR, ALBION TOWER
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Jane Stewart, Minister of National Revenue, has asked me to reply to your recent letter concerning your questions on expenses paid by a national political party on behalf of a party member and the member's spouse.
The confidentiality provisions of the Income Tax Act prevent me from disclosing the details of an individual's income tax situation, without his or her authorization. Also, as Revenue Canada is responsible for administering legislation related to Canadian income tax, border services and trade administration policy only, I would point out that I am unable to address the issue of the legality of payments under other statutes not administered by this department. However, I am able to provide you with the following general comments which discuss the issues of the deductibility of payments by a political party under the Act and also the tax consequences to members who may receive benefits from their party.
A payment or personal benefit of any kind, from a political party to an elected official who is a member of that party, is a taxable benefit unless the amount represents a reimbursement of an amount incurred in the performance of the member's offical duties. In determining whether there is a taxable benefit, the same criteria is applied to politicians as to all other taxpayers.
The Act contains a number of provisions which restrict the deductibility of amounts paid by all taxpayers. The eligibility for deduction does not effect the tax consequences to the recipient of the payment. For purposes of the Act, reasonable travelling expenses incurred by a member of a political party represent normal operating expenses when such amounts reasonably relate to the carrying out of the party's activities.
I trust my comments will be of assistance to you.
Yours sincerely,
Pierre Gravelle, Q.C.
Sandra Short
957-2136
October 21, 1996 (revised November 4, 1996)