30 September 2003 External T.I. 2003-0032765 - INCOME FROM OFFICE

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Whether the income earned by an individual, as a trustee of a mutual fund trust, is income from an office for purposes of subsection 5(1) of the Act.

Position:		Yes.   

Reasons: Definition of "office" in subsection 248(1) of the Act.

A. Seidel
XXXXXXXXXX (613) 957-2058
2003-003276
September 30, 2003

Dear XXXXXXXXXX:

Re: Income from an Office

We are writing in response to your letter dated July 30, 2003, wherein you requested our comments regarding the taxation of compensation, an "annual retainer" and a "per diem rate", paid to individuals in their capacity as trustees of a mutual fund trust.

The particular circumstances in your letter on which you have asked for our views appear to be a factual situation involving a specific taxpayer. As explained in Information Circular 70-6R5, it is not this Directorate's practice to comment on transactions involving specific taxpayers other than in the form of an advance income tax ruling. To the extent that you require confirmation of the tax consequences of proposed transactions involving specific transactions, you should be requesting an advance income tax ruling. However, we would point out that advance income tax rulings are not provided in respect of transactions that are substantially completed. Completed transactions are reviewed by the local tax services office.

Although we cannot provide any specific comments with respect to the situation described in your letter, the following general comments may be of assistance.

Subject to other provisions of Part I of the Income Tax Act (the "Act"), subsection 5(1) of the Act provides that a taxpayer's income for a taxation year from an office is the salary, wages and other remuneration, including gratuities, received by the taxpayer in the year. "Office" is defined in subsection 248(1) of the Act as "the position of an individual entitling the individual to a fixed or ascertainable stipend or remuneration". Where an individual is a trustee of a trust, and that individual receives compensation for the rendering of services to that trust, such compensation is included in computing the individual's income for income tax purposes pursuant to subsection 5(1) of the Act. The compensation would be included in the individual's income regardless of whether it is paid as a lump sum, a per diem rate or a combination of the two.

Paragraph 6(1)(a) of the Act provides that a taxpayer's income for a taxation year from an office includes the value of "other benefits of any kind whatever received or enjoyed" in the year. Where an individual trustee is reimbursed for out-of-pocket expenditures incurred as a trustee, it is a question of fact whether or not that individual has received or enjoyed a benefit of any kind whatever. This can only be determined after a review of all of the circumstances surrounding a particular situation.

Yours truly,

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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