CRA letter on taxability of payment from US charitable trust

April 07, 2014 | By: .(JavaScript must be enabled to view this email address)
Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law

CRA recently released a letter that discusses whether monthly payments from a US charitable trust paid to a former employee are taxable.

This situation involved a fund that provided financial assistance to former employees, who by reason of age or physical disability were unable to be self-supporting. The financial assistance was provided based on the individual's personal financial needs and not on their employment records and years of service with the former employer so CRA considered the assistance to be received in the individual's personal capacity, rather than by virtue of the individual's employment.

CRA concluded that the payments should be included under section 56 (1)(u) of the Income Tax Act as net income since the requirements of that criteria were met and then deducted under section 110(1)(f) of the Income Tax Act when computing taxable income.

Here is the full CRA letter:

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Charity Lawyer Mark Blumberg

Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.
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