Housing allowances paid by a registered charity or non-profit organization to players on sports teams or members of recreation programs

A sports team or recreational organization may exclude up to $329 a month from a player or member's income. The following conditions apply:

• the team or recreational program must be a registered charity or a not-for-profit organization;
• membership must be restricted to players or members under the age of 21;
• the allowance must be paid exclusively for board and lodging; and
• the player or member must be required to live away from his or her ordinary place of residence to participate on the team or in the program.

Registered charity

A registered charity is an organization that devotes its resources to charitable purposes. It does not pay, or make available, its income to any of its members. However, it can pay reasonable salaries to members and reimburse their out-of-pocket expenses. Charities must be registered with us. For more information, see Charities and giving.

Not-for-profit organization

A not-for-profit organization is organized and operated for any purpose except profit. Such organizations include those that operate exclusively for social welfare, civic improvement, pleasure, recreation—or any combination of these purposes. It is not necessary to register with us to be recognized as a not-for-profit organization. For more information, see Interpretation Bulletin IT496R, Non-Profit Organizations.

Note
Only registered charities and not-for-profit organizations can exclude the housing allowance from income.

Maximum exclusion

For 2012, the maximum exclusion is $329 a month per player or program participant. Any housing allowance amounts over $329 are taxable, pensionable, and insurable. For example, if an organization pays $375 a month for board and lodging to an individual who is required to live away from his or her ordinary place of residence, $329 of that amount is excluded from income, and the remaining $46 is reported as income on a T4 slip and subject to Canada Pension Plan contributions, Employment Insurance premiums, and income tax deductions.

Note
The income exclusion is limited to board and lodging amounts only. All other payments, such as entertainment, incidental, or recreational allowances, are treated separately—they are taxable, pensionable, and insurable.

Requirement to live away

Players or program participants must be required to live away from their ordinary place of residence while participating on the team or in the program. In addition, the allowance must be reasonably attributable to the costs the individual incurs for living away from his or her ordinary place of residence.

Note
An allowance received by players who are not required to live away from their usual or ordinary place of residence is taxable, pensionable, and insurable.

Provided the players must remain away from their ordinary place of residence in the off-season, a housing allowance they receive during the off-season would continue to be eligible for the $329 a month income exclusion. If the players return to their ordinary place of residence in the off-season and continue to receive a housing allowance, then the allowance is taxable, pensionable, and insurable for the period of time they live in their ordinary place of residence.

Age restrictions

The rules in place for each league will determine the age restriction guidelines. For example, if a league restricts membership to those under the age of 21 as of December 31 in a given year, and a player turns 21 in January, we will consider that player, and the team, eligible for the exclusion until the end of the season. Therefore, both the player who turns 21 in the course of a season and the team the player is on maintain eligibility for the exclusion provided the league rules establish that all players must be under 21 on or before a certain date.

The new legislation specifically restricts eligibility for this income exclusion to players on teams or members in programs whose participation is restricted to those under 21. If your league rules allow anyone to be over 21 at the start of a season, then all players or members are barred from receiving the $329 income exclusion.

Participation requirement

The $329 income exclusion must be for a player's or member's participation on the team or in the recreational program. It cannot be related to any other services he or she performs.

Allowances paid to a billeting family

When the allowance is paid directly to the family that is billeting the player, we still consider it to be the player's income and therefore eligible for the $329 exclusion. However, if the player pays the billeting family directly, or someone pays the family on the player's behalf, we consider that to be income to the family, not the player, and therefore the amount is not eligible for the $329 exclusion. The person in the billeting family who reports the income may be able to claim certain expenses against it.