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: whether certain payments relating to the adoption of special needs children are subject to taxation in Canada
Position: no
Reasons: neither employment income, nor social assistance income, nor training income
XXXXXXXXXX 2001-007072 Denise Dalphy, LL.B. (613) 957-9231 March 1, 2001
Dear XXXXXXXXXX:
Re: Adoption Subsidy
We are writing in reply to your facsimile transmission of August 21, 2000 to the International Tax Services Office wherein you requested an opinion on whether or not amounts that you receive pursuant to Adoption Subsidy Agreements (dated as of September 9, 1999) with the Missouri Department of Social Services (the "Missouri DSS"), State of Missouri, are subject to income taxation in Canada.
Written confirmation of the consequences inherent in particular 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 70-6R4. Where the particular transactions are partially completed or completed, the enquiry should be addressed to the relevant Tax Services Office. In this case, the International Tax Services Office has requested our views on the taxation of the adoption subsidy. Accordingly, we are providing the following comments.
We have reviewed the aforementioned Adoption Subsidy Agreements. There is no indication that you have an employment relationship with the Missouri DSS in connection with the care of your children. Further, there is no indication that you are receiving payments from the Missouri DSS as social assistance. That is, it appears that you are in receipt of the monies because your children have certain disabilities (and that the adoption of "special needs" children relieves the State of responsibilities), and that you are not receiving funds as result of any income deficiency of yourselves or your children. Accordingly, the amounts that you receive from the Missouri DCC that are described in the Adoption Support Agreements would not be subject to income taxation in Canada.
The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R4, the above comments do not constitute an income tax ruling and accordingly are not binding on the Canada Customs and Revenue Agency. Our practice is to make this specific disclaimer in all instances in which we provide an opinion.
Yours truly,
Steve Tevlin
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
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