An allowance paid to a person to cover expenses incurred in the course of the person's duties (other than an allowance for travel expenses that does not have to be included in the person's income) is taxable if the person is:

• an elected member of a municipal council (for example, a mayor or a municipal councillor);
• a member of the council or executive committee of a metropolitan community, a regional county municipality (RCM) or a similar body created under a Québec statute;
• a member of a municipal utilities commission or corporation, or of a similar body responsible for administering such services;
• a member of the board of directors of a school service centre; or
• a member of a public or separate school board, or of a similar body responsible for administering a school district.

Amount determined by law or regulation

The respective amounts a member of one of the above bodies is paid as salary and as an allowance for expenses incurred in the course of the member's duties are generally determined by a law or regulation. The law or regulation specifies what portion of the total amount (allowance and salary) paid to the member constitutes an allowance for expenses incurred in the course of duties. This portion is not taxable to a maximum of one-half of the amount paid to the member as salary or other remuneration in the year.

You have to include the portion of the allowance that exceeds half of the amount paid as salary or other remuneration in boxes A, G, I and L of the member's RL-1 slip (see courtesy translation RL-1-T). You must also enter “L-3” in a blank box of the slip, followed by the amount of the tax-exempt allowance for expenses incurred in the course of duties.

Amount not determined by law or regulation

Where no law or regulation specifies what portion of the total amount paid to a member constitutes an allowance for expenses incurred in the course of duties, we consider that one-third of the total amount (excluding allowances that do not have to be included in the member's income) constitutes such an allowance and that the remaining two-thirds constitute salary or other remuneration.

You have to include the portion of the allowance that exceeds one-third of the total amount paid in boxes A, G, I and L of the member's RL-1 slip. You must also enter “L-3” in a blank box, followed by the amount of the tax-exempt allowance for expenses incurred in the course of duties.

If the allowance paid to the member is less than one-third of the total amount paid, the allowance is an allowance for expenses incurred in the course of duties. If the member is not paid an allowance, no portion of the remuneration can be considered paid as an allowance.