Apr
6
2017

Municipal Volunteer Firefighter Honorariums

Many municipalities on Prince Edward Island pay an honorarium to volunteer firefighters who volunteer in their municipal fire departments. This honorarium must be reported on T4’s that are issued by municipalities during the year.  

Income Exemption

Volunteer firefighters may be eligible for an income exemption of up to $1,000 for any payments received from a municipality for carrying out firefighting duties. If a firefighter receives more than $1,000 in honorariums during the year, only the first $1,000 of the total amount is tax‐exempt. However, if they choose to claim this income exemption, then the Volunteer Firefighter Tax Credit will not be able to be claimed; this is described in more detail below.  

Volunteer Firefighter Tax Credit

In 2011, the federal government implemented the Volunteer Firefighter Tax Credit (VFTC), which allows volunteer firefighters to claim a $3,000 annual tax credit. To be eligible for this credit, individuals must meet the following conditions:

  • you were a volunteer firefighter in the year; and
  • you completed at least 200 hours of eligible volunteer firefighting services with one or more departments in the year.

Limitations

Recipients must be aware that they can not claim both the VFTC and receive the $1,000 tax‐free income exemption. If a recipient chooses to claim the income exemption, then they will not be able to claim the VFTC in that year. Therefore, to be able to claim the VFTC, the entire honorarium amount must be claimed as taxable income in the year received. For information on tax scenarios under both options, as well as information on properly preparing T4’s for volunteer firefighters, please contact a professional accountant or the Canada Revenue Agency.  

For more information, please see the following links from the Canada Revenue Agency:

  • http://www.cra‐arc.gc.ca/tx/ndvdls/tpcs/ncm‐tx/rtrn/cmpltng/ddctns/lns360‐390/362‐eng.html
  • http://www.cra‐arc.gc.ca/tx/ndvdls/tpcs/ncm‐tx/rtrn/cmpltng/rprtng‐ncm/lns101‐170/101/vlntr‐eng.htm

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