2014-0548701E5 Volunteer Firefighters- Income Exemption

Principal Issues: 1. Entitlement to the exemption under s.s. 81(4) for employee-volunteers.

Position: 1. Employee-volunteers are not entitled to the exemption if their employment position is related to firefighting.

Reasons: 1. Paragraph 81(4)(b) of the legislation.

Author: Dubis, Robert
Section: 81(4); 81(4)(b)

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                                                                                                                                                          2014-054870
                                                                                                                                                          Robert Dubis, CPA,
                                                                                                                                                          CA

February 5, 2015

Dear XXXXXXXXXX:

We are replying to your letter of September 25, 2014, in which you asked for our views regarding the volunteer firefighters and their entitlement to the exemption under subsection 81(4) of the Income Tax Act (the “Act”).

Our comments:

This technical interpretation provides general comments about the provisions of the Act and related legislation.  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 70-6R6, Advance Income Tax Rulings and Technical Interpretations.

You state that an individual in your municipality is employed in a full-time position with your fire department and also assists the fire department in the capacity of a volunteer. A condition of continued employment is that the individual must also be a volunteer firefighter in good standing. All volunteer firefighters are compensated for their volunteer services in accordance with a set policy and operational guidelines.

In general, subsection 81(4) of the Act provides an exemption of up to $1,000 that an individual receives in the year from a government, municipality or other public authority (“the employer”) for performing certain volunteer duties. The duties may include those of an ambulance technician or firefighter, or a person assisting in the search or rescue of individuals or in other emergency situations. The individual cannot have been employed or engaged by the employer in the same year, otherwise than as a volunteer, in connection with the performance of any of the duties described, or similar duties. Based on the information provided, it is our view that the individual does not qualify for the exemption under subsection 81(4) of the Act because the individual performs firefighter duties in connection with his employment with the municipality.

We trust our comments will be of assistance.

Yours truly,

Pamela Burnley, CPA, CA
Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate

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