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Ms. Ellaine Ashby
Executive Director
British Columbia Federation of Foster Parent Associations
7342 Winston Street
Burnaby BC V5A2H1
Dear Ms. Ashby:
The office of the Honourable James M. Flaherty, Minister of Finance,
forwarded to me a
copy of your letter, which I received on February 1, 2008, concerning the application of
paragraph 81(1)(h) of the Income Tax Act.
That paragraph of the Act exempts the income an individual, the caregiver, receives for the
care of another individual, the cared-for individual, if each of the following conditions is
The payment is a social assistance payment ordinarily made on the basis of a means,
needs, or income test;
The payment is made under a program provided for by federal, provincial or territorial
The payment is received directly or indirectly by the caregiver for the benefit of the
cared-for individual;
The cared-for individual is not the caregiver’s spouse or common-law partner or related
to the caregiver or the caregiver’s spouse or common-law partner;
No family allowance under the Family Allowances Act or any similar allowance
provided for by provincial or territorial law can be payable in respect of the cared-for
individual for the period for which the social assistance payment is made; and
The cared-for individual resides in the caregiver’ s principal place of residence, or the
caregiver’ s principal place of residence must be maintained for use as the cared-for
individual’s residence, during the period for which the payment is made.
I can confirm that amounts paid to a caregiver to maintain the availability of his or her
principal place of residence for use by a cared-for individual, often referred to as a bed
reservation fee, in situations in which the above described conditions are met will be exempt
according to paragraph 81(1 )(h) of the Act. Those amounts are therefore not included on the
individual’s T1 return.
Payments that do not meet the conditions in paragraph 81(1 )(h) of the Act may be taxable to
the recipient. Such circumstances would require a case-by-case review. If an individual
wants his or her particular situation reviewed, he or she can contact the Client Services
Division of the local tax services office.
You ask about caregivers who own two residences. While a particular caregiver may own
more than one residence, at any given time, an individual can only have one principal place
of residence. Ordinarily, an individual’s principal residence will be the place where the
individual regularly, normally, or customarily resides. Other factors, such as where the
individual’s personal belongings are kept or where the individual’s mail is sent may have an
impact on the determination of the individual’s principal residence. There is nothing to
prevent a caregiver from employing other individuals to assist in providing the caregiving
services at the caregiver’s principal residence.
I trust that the information provided is helpful.
- signature removed -
The Honourable Gordon O’Connor, P.C., M.P.
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