27 November 1987 Income Tax Severed Letter 5-3832 - [Supplementary Ready Reserve Grant]

F.B. Fontaine

Attention: B.J. Berryman 957-2140
           Commodore 
           Director General

NOV 27 1987

Dear Sirs:

Re: Supplementary Ready Reserve Grant

This is in reply to your letter dated August 28, 1987.

Our understanding of the situation is as follows:

1. The Supplementary Reserve is a sub-component of the Canadian Armed Forces and will assume a critical role in meeting Canada's immediate manning requirements in times of national emergency or mobilization.

2. To make the Supplementary Reserve more effective and responsive, a new category, the Supplementary Ready Reserves (the "SRR") will be introduced. Members of the SRR will be volunteers and those who are accepted will agree to report to a designated Canadian Forces Unit for an annual assessment interview and confirm their intention to report voluntarily for active military service in times of emergency.

3. Members of the SRR will not be paid for this service, however, expenses directly related to travel, meals and accommodation will be reimbursed. Also, members of the SRR will be given an annual grant of $300 (the "SRR grant") to offset non-reimbursable expenses incurred in maintaining their suitability.

it is your view that the SRR grant is similar in purpose to the volunteer fire fighter grant under subparagraph 6(1)(b)(viii)of the Income Tax Act (the "Act"). Accordingly, the SRR grant should be non-taxable.

Under paragraph 6(1)(b) of the Act an amount received by a taxpayer as an allowance for personal or living expenses or as an allowance for any other purpose is subject to tax unless the amount is an allowance described under subparagraphs 6(1)(b)(i) to (ix), subsection 6(6) or subsection 81(3.1) of the Act.

Subparagraph 6(1)(b)(viii) of the Act specifically refers to "allowances received by a volunteer fireman XXX by virtue of the discharge of his duties as a volunteer fireman XXX. Consequently, this subparagraph would not apply in respect of an allowance received by a taxpayer who is not a volunteer fireman. In addition, it is our view that the provisions of subparagraphs 6(1)(b)(i) to (vii) and (ix), subsection 6(6) or subsection 81(3.1) of the Act would also not apply in the circumstances. Accordingly, the non- accountable amount of $300 received by a member of the SRR would be included in computing the individual's income.

Since there is no specific provision under the Act to exempt an SRR grant from the recipient's income, a change in the law would be required to provide such an exemption. As amendments to the Act are the responsibility of the Department of Finance we would, therefore, suggest that you provide the details of your situation to officials of that Department for their consideration.

We trust that our comments will be of assistance to you.

Yours truly,

ORIGINAL SIGNED IV ORIGINAL SIGNED PAR ROBERT H. JOYCE

for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch