| 922664 | |
| R.B. Day | |
| 19(1) | (613) 957-2136 |
October 26, 1992
Dear 19(1)
Re: Incentive Grant - Ministry of Health - Province of Ontario
We are writing in reply to your letter of September 2, 1992, wherein you requested clarification of whether or not the position in paragraph 6 of IT-273R is still operative.
As we understand it, you are specifically concerned with the grants given to medical or dental practitioners who locate their practice in an "underserviced designated area" for a consecutive twelve month period. The receipt of the grant is conditional upon providing the professional services, and is not tied into specific expenses or capital outlays.
Although paragraph 6 of IT-273R would appear to exclude the grant as income or as an offset to other deductible expenses, there have been legislative changes, such as the addition of paragraph 12(1)(x) of the Income Tax Act (the "Act") since the bulletin was issued in 1981 that may affect the position set out in that bulletin.
Our Comments
IT-273R discusses the general principles concerning the taxation of government assistance and the Special Release to IT-273R listed the various bulletins dealing with specific assistance programs. IT-204 entitled "Grants for the Establishment of Medical or Dental Practices in Ontario" dealt with the specific program referred to in your letter.
On May 17, 1991, the Department issued IT Directive ITD-2 (copy attached) which cancelled several Interpretation Bulletins and Special Releases. On page three of the directive, under the heading "Bulletins related to government assistance", the status of IT-273R is discussed in some detail relative to the income tax implications of paragraph 12(1)(x) of the Act. It should be noted that the Special Release to IT273R was cancelled, as was IT-204, and that IT-273R will eventually be completely revised because of the addition of paragraph 12(1)(x) of the Act and other factors.
In view of the above, it is our opinion that the comments in paragraph 6 of IT-273R would no longer apply to the grant referred to above. It is also our view that the grants given to medical or dental practitioners would be taxable to the recipients by virtue of subparagraph 12(1)(x)(iv) of the Act.
We trust our comments will be of assistance to you.
Yours truly,
J.A. Szeszyckifor DirectorBusiness and General DivisionRulings DirectorateLegislative and IntergovernmentalAffairs Branch