G. Ozols 957-2127
NOV 2 1988
Dear Sir:
Re: Members Not Re-Elected
Further to our meeting of September 28, 1988, we have reviewed paragraphs O and P of the revised Chapter H-3 of the Member's Manual of Allowances and Services (the "Manual"), a copy of which you provided to us. Our review has taken into account the proposed amendments to the Income Tax Act (the "Act") concerning counselling benefits for employees, as set out in the Department of Finance's Press Release of June 30, 1988, a copy of which is enclosed.
Should these amendments be implemented into law as proposed in the press release, it is our view that the reimbursement for the following services outlined in paragraph O of the Manual would be considered non-taxable benefits: financial counselling, retirement counselling, re-employment counselling and out-placement services and stress management counselling. Although financial counselling is not specifically mentioned in the proposed amendments, we would consider financial counselling made available on a member's retirement (including his defeat in an election) to come within the scope of the proposed amendments.
We do not believe that the educational training costs would be a non-taxable benefit under the proposed amendments, even though they are in respect of a member's retirement. We would distinguish between counselling services, which is the term used in the proposed amendments, and educational or training services. The latter would be a taxable benefit under paragraph 6(1)(a) of the Act.
However, if the educational and training costs are in the form of tuition fees, the amounts paid by the former members may qualify for the tuition tax credit under section 118.5 of the Act.
With reference to the services outlined in paragraph P of the Manual, it is our opinion that the reimbursement for the cost of any of these expenses would not constitute a taxable benefit under the Act. It is our understanding from the Manual that these expenses must be incurred for the purpose of completing outstanding parliamentary business and winding-up the operations of the Ottawa and constituency offices and therefore do not confer any personal benefit on the former member.
We enclose a copy of Interpretation Bulletin IT-470R on the subject of benefits received from an office or employment. Former Members of Parliament seeking further information on the tax treatment of their entitlements under Chapter H-3 of the Manual may contact Mr. Gunar Ozols of this office at (613) 957-2127.
We trust the above is of assistance to you.
Yours truly,
ORIGINAL SIGNED BY B.W. Dath Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch