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Tax Exemption for Municipal Elected Officials

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Resolution Category: 
Extraordinary Resolution 1
Penhold, Town of
Active Clauses: 

IT IS THEREFORE RESOLVED THAT the Alberta Urban Municipalities Association advocate for the Federal Government to provide a minimum tax exemption for elected officials as an acknowledgement and appreciation for the public service being provided.

Whereas Clauses: 

WHEREAS the 2017 Federal Budget removed the tax exemption for one third of non-accountable expense allowances  paid to members of provincial and territorial legislative assemblies and certain municipal office holders effective January 1st 2019;

WHEREAS the federal government did not hold consultations on this matter prior to the budget;

WHEREAS the appreciation shown for serving the public from the federal government to elected officials has been removed;

WHEREAS the removal of this exemption will create less take home pay for elected officials; and

WHEREAS each community will need to increase the respective Councillor pay and make up the shortfall from the community tax base.

Resolution Background: 

Currently municipal elected officials receive a tax exemption for one third of their non-accountable expense allowances related to the community work they perform under their role. This exemption was originally given by the federal government as an acknowledgement to individuals who contribute to building communities. This is/was appreciated.

Without prior consultation, the federal 2017 Budget removed this exemption/gratitude effective the 2019 taxation year.

This appreciation needs to remain intact. As an example, this could be similar to the federal emergency personnel exemption, removes income tax on the first $1,000 of income earned by volunteer ambulance technicians, fire fighters, search and rescue, or other types of emergency volunteers.

The Federation of Canadian Municipalities recently adopted a similar resolution.

Government Response: 

While AUMA did not receive a direct response from the Government of Canada, we worked with the Federation of Canadian Municipalities, who received the following response from Finance Canada Minister Bill Morneau:

… [The] government took steps to bring the tax treatment of non-accountable allowances to municipal office holders in line with that afforded to other employees. An employer may reimburse work-related expenses on a tax-free basis, but non-accountable allowances may substitute for salary and are thus taxable.

Minister Morneau’s letter underlined that the government will not reverse its decision in this matter.

AUMA Notes: 
  • AUMA worked with FCM to provide guidance to municipalities on the various options to addressing the cancellation of the exemption.  AUMA shared our work with Municipal Affairs and the Government Finance Officers Association to ensure it aligned with advice they are providing municipalities.