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: Taxation of Foster Care Payments
Position: Not taxable if conditions of 81(1)(h) are met. Base payments made by non-profit organizations may be exempt
Reasons: Consistent with prior opinions
October 2, 2000
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Martin Cauchon, Minister of National Revenue, has asked me to reply to your correspondence of July 17, 2000, concerning the taxation of foster care payments.
In general, paragraph 81(l)(h) of the Income Tax Act excludes certain social assistance payments from a recipient's income. On April 26, 1999, the Canada Customs and Revenue Agency (CCRA) published Income Tax Technical News No.17, which clarified the position of the CCRA when social assistance payments are made through a non-profit organization to an individual who is responsible for a foster home. I have enclosed a copy of this release for your information.
Paragraph 81(1)(h) of the Act was amended on June 29, 2000, effective for the 2001 and later taxation years, as a result of the addition of the definition of a "common-law partner" in subsection 248(1). However, this change to the Act will not affect the position of the CCRA concerning the tax treatment of social assistance payments made to foster parents.
If you need further clarification on how the provision applies, I invite you to contact Mr. John Oulton, Manager, Business, Property and Employment Income Section, Income Tax Rulings Directorate, by calling 1-613-957-2098, or by writing to him at 320 Queen Street, Place de Ville, Tower A, 16th Floor, Ottawa, Ontario K1A 0L5. If you or representatives of your member organizations need further assistance on a particular situation, I suggest that you contact the Assistant Director of the Client Services Division of your local tax services office.
I trust that the information provided will be of assistance.
Yours sincerely,
Bill McCloskey Assistant Commissioner Policy and Legislation Branch
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