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 Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Whether maternity benefits received by a status Indian are tax exempt where they relate to exempt employment income.
Position:
Yes, maternity benefits are exempt and its reasonable that they be given the same treatment as UI benefits received throughout the maternity period.
Reasons:
The maternity benefits are treated the same as the UI and one must be eligible for UI to receive these maternity benefits.
May 8, 1995
Client Assistance HEADQUARTERS
Kathy Hoaff Roberta Albert
(613) 957-2100
950903
XXXXXXXXXX
Tax Treatment of a Status Indian's Maternity Leave Allowance
We are replying to your request of March 21, 1995 concerning the tax treatment to be accorded the maternity leave allowance to be received by the above-noted status Indian.
The Indian in this particular situation has been working with
XXXXXXXXXX
She proceeded on maternity leave on XXXXXXXXXX Based on the tax status of employment income over the last 20 weeks of insurable earnings, 36% of the unemployment insurance ("UI") benefits to be received while on maternity leave will be exempt.
With respect to UI benefits, generally, an individual's weekly benefit is calculated on the last 20 weeks of insurable employment in the period of 52 weeks immediately preceding the commencement of a benefit period (referred to as a "qualifying period"). Where the recipient of the UI benefit is a status Indian, if a portion of the employment income in this qualifying period was exempt, then a similar portion of the UI benefit will be exempt. The Department allows the most favourable result of using either the last 20 weeks of insurable employment or the number of insurable weeks in the last 52 week period.
To be eligible for the maternity leave allowance in the Federal Government, an employee must have completed six months of continuous service and must agree to return to work for a period of at least six months. The employee must also have applied for and must be eligible to receive UI benefits during the maternity leave. In addition, the payment of the maternity leave allowance is tied into the payment of the UI benefits throughout the period of leave. Accordingly, in our view, it is reasonable that the maternity leave allowance be accorded similar tax status as the UI benefits received throughout the period of maternity leave. In this particular scenario, as 36% of the UI benefits were tax exempt, 36% of the maternity leave allowance should also be tax exempt.
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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