While the target in the March 22, 2017 federal budget section titled, ‘Allowances for Members of Legislative Assemblies and Certain Municipal Officers’ (below) appears to be the non-accountable allowances for elected officials (ie: 1/3 non-taxable portion of Council/Board remuneration), it seems to cast a much wider net to include per diems commonly used by local governments for both elected officials and employees. While per diem expense allowances for business travel and training are administratively efficient, a policy revision to require expense claims based on actual expenditures with receipts by 2019 should be considered to mitigate the taxable benefit burden.

ALLOWANCES FOR MEMBERS OF LEGISLATIVE ASSEMBLIES AND CERTAIN MUNICIPAL OFFICERS

 The reimbursement of expenses incurred in the course of carrying out the duties of an office or employment is generally not a taxable benefit to the recipient. By contrast, a non-accountable allowance for which an individual does not have to provide details or submit receipts to justify amounts paid is generally a taxable benefit. Certain officials may, however, receive non-accountable allowances for work expenses that are not included in computing income for tax purposes. These officials are:

• elected members of provincial and territorial legislative assemblies and officers of incorporated municipalities;

• elected officers of municipal utilities boards, commissions, corporations or similar bodies; and

• members of public or separate school boards or of similar bodies governing a school district.

The excluded amount is limited to half of the official’s salary or other remuneration received in that capacity in the year. Budget 2017 proposes to require that non-accountable allowances paid to these officials be included in income. The reimbursement of employment expenses will remain a non-taxable benefit to the recipient. In order to provide affected organizations more time to adjust their compensation schemes, this measure will apply to the 2019 and subsequent taxation years.

Paul Macklem, Executive Director