June 2024 Newsletter

Caring for foster children was taxable

Paragraph 81(1)(h) of the Income Tax Act provides an exemption for social assistance payments made through a government program for foster care of children on one’s home.

In the recent case of Brereton v. The King (2024 TCC 41), Mr. Brereton earned income from caring for children as a subcontractor. He claimed the BC government had told him the income was exempt. However, the CRA assessed him for tax on the income, and he appealed to the Tax Court of Canada.

The Court dismissed the appeal, ruling that the income was taxable, since Mr. Brereton was working at other properties, not caring for children in his own home. It did not matter if he had received different information from the BC (or any other) government; tax applies based on the law, and incorrect information — even if given by the CRA — does not change how tax applies.

Last modified on June 4, 2024 12:00 am
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