Principal Issues: What is the tax treatment of amounts paid to eligible nurses under the Ontario Community Commitment Program for Nurses (CCPN) in a particular situation where employers are responsible for flowing these amounts directly to nurses?
Position: Amounts paid to nurses under the CCPN are considered to be employment income under subsection 5(1).
Reasons: This position is consistent with previous position regarding the tax treatment of top-up payments when paid by the employer. Incentives or earnings supplements provided under a project sponsored by a government or government agency in Canada to encourage individuals to obtain or keep employment are taxed under subparagraph 56(1)(r)(i) when they are not paid through the employer.
XXXXXXXXXX 2023-096739 R. El-Kadi
March 23, 2023
Dear XXXXXXXXXX:
Re: Incentive payments to nurses under the Community Commitment Program for Nurses
We are writing in response to your email of March 15, 2023, in which you ask about the tax treatment of amounts paid to eligible nurses under the Community Commitment Program for Nurses (CCPN) program.
It is our understanding that the CCPN program is sponsored by the Government of Ontario. Broadly speaking, it is intended to attract eligible nurses who have not been recently in practice, by providing them with $25,000 in grant funding in exchange for a two-year commitment to an eligible employer. The program is designed such that employers will be flowing the payments directly to their eligible employees.
Our comments:
This technical interpretation provides general comments about the provisions of the Income Tax Act (the Act) and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R12, Advance Income Tax Rulings and Technical Interpretations.
The tax treatment of payments to eligible nurses under the CCPN program is determined by the design of the program and the manner in which the payments are delivered.
If a provincial government sponsors a program that is designed to deliver incentive payments or earnings supplements directly to eligible nurses, it is our view that the amount received by nurses would be included in income under subparagraph 56(1)(r)(i) of the Act. While the payer of these amounts is required to withhold income tax at source, no source deductions are required in this case for Canada pension plan or employment insurance premiums.
By contrast, where a provincial government sponsors a program that is designed to have employers deliver the payments directly to eligible nurses, it is our view that the amount received by nurses would be included in their employment income under subsection 5(1) of the Act. Amounts paid by the provincial government to an employer in these circumstances would effectively subsidize that employer’s payment of additional salary, wages, or other remuneration to eligible nurses for the employment services they perform.
In the present case, it is our understanding that employers will be delivering payments directly to their employees who are eligible under the CCPN program; therefore, it is our view that payments received by eligible nurses under the program are to be included in their employment income under subsection 5(1) of the Act.
We trust that these comments will be of assistance to you.
Yours truly,
Lita Krantz, CPA, CA
Manager
Tax Credits and Ministerial Issues Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch