Personal Finance

foreign social benefit: taxable income?

  • Last Updated:
  • Mar 9th, 2015 2:42 pm
Tags:
None
[OP]
Deal Addict
Jul 15, 2009
1612 posts
697 upvotes

foreign social benefit: taxable income?

Any international tax experts here?

Is a social benefit received from a foreign government considered taxable income in Canada? The specific benefit is a child benefit similar to CCTB or UCCB and "is a cash benefit intended to partially offset the financial cost of raising child(ren)" (definition from the foreign legislation). The source of the funds is the foreign government. A wrinkle is that the foreign government delegates distribution of the benefits to employers, who pay it out together with payroll. However, the benefit is unrelated to employment, and parents without an employer would receive it directly from the government. The parents and children in this case are residents of Canada for tax purposes.

Is such a benefit taxable income in Canada? If so, then which parent would be required to report it? The foreign country has complicated rules to determine which parent actually gets paid the benefit, but they basically boil down to the parent with higher income.

The closest Canadian programs are not much help in determining the answer, since the CCTB is not taxable but the UCCB is taxable, and is taxable to the parent with lower total income.

The ITA explicitly defines the UCCB as taxable (56 (6)). I could not find anywhere that it explicitly defines the CCTB as non-taxable. Does this mean that similar kinds of benefits are not taxable unless specifically mentioned?

ITA 3 defines income as being from "office, employment, business and property". Which of these four could a government benefit possibly fall under?

One last wrinkle is that in addition to disbursing the basic government benefit that is unrelated to employment, the employer also adds a top-up supplement from its own funds. I assume that this top-up would be taxable as employment income. Is that right?

How could I get a correct answers to these questions? I assume that the regular call centre staff at the CRA would not know about such an unusual situation, and many other threads here suggest that the call centre staff have given wrong answers to other posters here, and their answers have no guarantee of correctness. Is there any way to get a real answer?
4 replies
Deal Fanatic
Aug 27, 2004
6627 posts
205 upvotes
Toronto, ON
bubak wrote:
Mar 8th, 2015 1:31 pm
Any international tax experts here?

Is a social benefit received from a foreign government considered taxable income in Canada? The specific benefit is a child benefit similar to CCTB or UCCB and "is a cash benefit intended to partially offset the financial cost of raising child(ren)" (definition from the foreign legislation). The source of the funds is the foreign government. A wrinkle is that the foreign government delegates distribution of the benefits to employers, who pay it out together with payroll. However, the benefit is unrelated to employment, and parents without an employer would receive it directly from the government. The parents and children in this case are residents of Canada for tax purposes.

Is such a benefit taxable income in Canada? If so, then which parent would be required to report it? The foreign country has complicated rules to determine which parent actually gets paid the benefit, but they basically boil down to the parent with higher income.

The closest Canadian programs are not much help in determining the answer, since the CCTB is not taxable but the UCCB is taxable, and is taxable to the parent with lower total income.

The ITA explicitly defines the UCCB as taxable (56 (6)). I could not find anywhere that it explicitly defines the CCTB as non-taxable. Does this mean that similar kinds of benefits are not taxable unless specifically mentioned?

ITA 3 defines income as being from "office, employment, business and property". Which of these four could a government benefit possibly fall under?

One last wrinkle is that in addition to disbursing the basic government benefit that is unrelated to employment, the employer also adds a top-up supplement from its own funds. I assume that this top-up would be taxable as employment income. Is that right?

How could I get a correct answers to these questions? I assume that the regular call centre staff at the CRA would not know about such an unusual situation, and many other threads here suggest that the call centre staff have given wrong answers to other posters here, and their answers have no guarantee of correctness. Is there any way to get a real answer?
Have you consulted the tax treaty with the country in question?
[OP]
Deal Addict
Jul 15, 2009
1612 posts
697 upvotes
I checked the tax treaty and it didn't say anything that might be related.

Top