| 922429 | |
| R.B. Day | |
| (613) 957-2136 |
September 23, 1992
Regina District OfficeR. HauffBusiness Enquiries
Social Assistance Payments Received Fraudulently
We are writing in reply to your memorandum of August 11, 1992, wherein you requested our opinion as to whether or not individuals who received Social Assistance Payments fraudulently, could be denied the deduction permitted by paragraph 110(1)(f).
In our view, the approval and payment of benefits by a welfare agency would constitute prima facie evidence that the payments were made on the basis of a means, needs or income test, notwithstanding that, at a later date, the payments were found to have been approved on the basis of false information provided by the applicant. Accordingly, we are of the view that the payments in question are taxable under paragraph 56(1)(u) of the Act.
In the case of fraudulently obtained welfare payments, it is likely that the courts would hold that, since the payments are taxable under paragraph 56(1)(u), a corresponding deduction under subparagraph 110(1)(f) of the Act would be allowed.
In all probability, the relevant provincial legislation would require the repayment of social assistance payments obtained through fraud or misrepresentation and such repayments would not be deductible for income tax purposes.
P.D. FuocoSection ChiefPersonal and General SectionBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch