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.
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Herb Dhaliwal, Minister of National Revenue, has asked me to reply to your correspondence addressed to XXXXXXXXXX, concerning the tax treatment of per diems received by board members of Saskatchewan District Health Boards. A copy of your correspondence was sent to Mr. Dhaliwal by the Honourable Paul Martin, Minister of Finance, on March 1, 1999. XXXXXXXXXX also forwarded a copy of the February 11, 1999 letter sent to you from XXXXXXXXXX regarding this matter.
Subsection 81(3) of the Income Tax Act provides that, where a person, who is an official as described, receives an allowance for expenses incident to the discharge of that person’s duties, the allowance will be deemed not to be taxable income to the extent it does not exceed one-third of his salary. Paragraph 81(3)(b) of the Income Tax Act includes a person who is an officer of a municipal utilities board, commission or corporation, or any other similar body, where the incumbent is elected by popular vote.
Your specific concern is whether district health boards established pursuant to The Health Districts Act can be regarded as being a similar body for purposes of paragraph 81(3)(b) of the Income Tax Act, so that elected board officials may receive a non-taxable expense allowance.
Such a board established by a province can only be considered to be a similar body, if it can be regarded as being akin or equivalent to a body established by a municipal level of government. However, the functions and responsibilities of a district health board are different than those of a municipality. Accordingly, the district health boards established by the province of Saskatchewan cannot be regarded as being a similar body. Therefore, the provisions of paragraph 81(3)(b) of the Income Tax Act would not apply to an expense allowance of the elected board members of district health boards.
The role of Revenue Canada is to administer and enforce the Act as passed by Parliament. The issues raised in your letter relate to tax policy, which is the responsibility of the Department of Finance. In this regard, I note that your Member of Parliament has already relayed your concerns to the Honourable Paul Martin, Minister of Finance, in a letter of January 15, 1999.
I appreciate being made aware of your concerns on this matter.
Yours sincerely,
Bill McCloskey Assistant Deputy Minister Policy and Legislation Branch
David Shugar
957-2133
April 9, 1999
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