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: What is the authority for reporting the gross amount of a death benefit on a T4A?
Position: Paragraphs 221(1)(b) and (d) authorize the Governor in Council to make regulations prescribing the evidence required under the Act. Regulation 200(1) refers to the prescribed information returns.
Reasons:
June 23, 1999
Revenue Collection Directorate HEADQUARTERS Trust Accounts Division David Shugar 957-2133
Attention: Don McKenzie 7-991693
T4A PREPARATION - DEATH BENEFIT
This is in reply to your request for additional comments on our views with respect to the requirement for an employer to report the gross amount of a death benefit on a T4A information return.
In a discussion on June 10, 1999, (McKenzie/Shugar), you stated that you would like us to provide additional comments on two of the statements made in the third paragraph of the March 25, 1999 email you forwarded us. The first statement is “XXXXXXXXXX". The second statement followed the first and is “XXXXXXXXXX".
Our Comments
Our comments are based on the answers to the following questions.
1. What does subsection 200(1) of the Income Tax Regulations (the “Regulations”) mean?
2. Is there a requirement for an employer to report on a T4A any amount of a death benefit that is covered by the exclusion of the first $10,000? and,
3. What is the authority for requiring an employer to complete the information return in prescribed form?
1. What does subsection 200(1) of the Regulations mean?
Subsection 200(1) of the Regulations states:
“Every person who makes a payment described in subsection 153(1) of the Act (other than an annuity payment in respect of an interest in an annuity contract to which subsection 201(5) applies) shall make an information return in prescribed form in respect of such payment ...”.
The regulation applies when a person has paid an amount described under subsection 153(1) of the Income Tax Act (the “Act”), in this case, a death benefit. The regulation then states that the payer shall make an information return in prescribed form in respect of such payment. However, the regulation does not describe the information, or amounts, that are required to be reported on the prescribed form. That is, it does not say to report the tax deducted under subsection 153(1), if any, nor does it say to report the gross or net amount of the death benefit. The regulation only says that if a death benefit was paid, information has to be reported in respect of it.
The words “in respect of” are broad. The interpretation of those words was referred to by the Judge in the Supreme Court of Canada case of Nowegijick v. The Queen et al, 83 DTC 5041, at p. 5045:
The words “in respect of” are, in my opinion words of the widest possible scope. They import such meanings as “in relation to”, “with reference to”, or “in connection with”. The phrase “in respect of” is probably the widest of any expression intended to convey some connection between two related subject matters.
Therefore, in the context of subsection 200(1) of the Regulations, the phrase “in respect of such a payment” means an information return must be made in prescribed form, concerning such a payment, or in reference to such a payment. It does not mean that the payer is limited to reporting on the information return only the amount of the payment described in subsection 153(1) of the Act (the death benefit, in this case). If the phrase were that restrictive, it would not allow the amount of taxes withheld to be reported on the information return.
XXXXXXXXXX
2. Is there a requirement for an employer to report on a T4A any amount of a death benefit that is covered by the exclusion of the first $10,000?
The Employer must refer to the appropriate information return for direction on what to report on the return. The Employers’ Guide provides those directions. These prescribed forms and guides are necessary to give effect to subsection 200(1) of the Regulations. As stated in our letter of May 9, 1999, the Employers’ Guide describes the information required as the amount of the death benefit before the deduction of $10,000.
3. What is the authority for requiring an employer to complete the information return in prescribed form?
XXXXXXXXXX
As stated above, subsection 200(1) of the Regulations states that the payer shall make an information return in prescribed form.
Paragraphs 221(1)(b) and (d) of the Act authorize the Governor in Council to make regulations prescribing “the evidence required to establish the facts relevant to assessments under this Act” and “requiring any class of persons to make information returns respecting any class of information required in connection with assessments under this Act”.
The regulations made under paragraph 221(1)(b) of the Act requiring the evidence facilitating assessments of employees and employers are largely in Part II of the Income Tax Regulations, more particularly in your case, in section 200 thereof. The form in which this evidence is to be submitted to the Department is the information returns as referred to paragraph 221(1)(d) of the Act and in Part II of the above Regulations. These information returns are forms prescribed by order of the Minister or designated/delegated officer within the definition of “prescribed” in subsection 248(1) of the Act and the form is incontrovertible within subsection 244(16) if, as is usual, it is stated thereon that it is prescribed or authorized by the Minister.
The last paragraph of the e-mail states that there is no requirement for an employer to report reasonable allowances paid for business use of an employee's automobile. Paragraph 6(1)(b) of the Act states that the employee does not have to report certain allowances (as income). But it is the Employer's Guide to Payroll Deductions - Taxable Benefits, under the heading 'Reporting Automobile Allowances' on the T4 (on page 12), not the Act, that says not to report the allowance on the T4.
In conclusion, the statutory authority for reporting the amount of the death benefit before the deduction of $10,000 provided for in the definition of death benefit under subsection 248(1) of the Act is as follows:
1. Authority in the Act for the Regulations .... Paragraphs 221(b) and (d) of the Act.
2. Information returns required ... Subsection 200(1) of the Regulations..
3. Prescribed form of the information returns .... Subsection 248(1) of the Act.
Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
- 3 -