Volunteer Firefighter Tax Credit

The Volunteer Firefighter Tax Credit (VFTC) is a significant provision within the Canadian tax system designed to acknowledge and support the crucial services provided by volunteer firefighters across the country. This tax credit is rooted in the Income Tax Act, specifically Section 118.06, which outlines the definition of eligible volunteer firefighting services and the criteria for claiming the credit. Understanding the legal intricacies and eligibility requirements of the VFTC is essential for volunteer firefighters seeking to benefit from this provision.

Eligible volunteer firefighting services, as defined in Section 118.06, encompass a range of activities performed by an individual in their capacity as a volunteer firefighter. These services primarily include responding to and being on call for firefighting and related emergency calls, attending meetings held by the fire department, and participating in required training related to the prevention or suppression of fires. It’s important to note that services provided to a fire department in a capacity other than as a volunteer do not qualify under this definition.

To claim the VFTC, an individual must perform not less than 200 hours of service within a taxation year. These services can be a combination of eligible volunteer firefighting services for a fire department or eligible search and rescue volunteer services for an eligible search and rescue organization. Upon request by the Minister, the individual must also provide certificates from the fire chief or a delegated official of each fire department, attesting to the number of hours of eligible volunteer firefighting services performed.

Interestingly, the VFTC is not limited to services provided within Canada. As clarified in Internal T.I. 2012-0432221I7, a Canadian resident living on the Canada-US border and providing volunteer firefighting services at a fire station in the US can qualify for the VFTC, provided all other requirements under Section 118.06 are met. This interpretation underscores the inclusive approach of the tax credit, recognizing the cross-border nature of some volunteer firefighting services.

The Canada Revenue Agency (CRA) plays a pivotal role in the administration of the VFTC, setting expectations for fire departments to examine their on-call procedures and certify the number of hours of eligible volunteer firefighting services. The CRA emphasizes that carrying a pager or phone to receive notifications of an emergency, in itself, does not establish that an individual was on call. Instead, the assessment of on-call availability for response should align with each fire department’s expectations, operational requirements, and applicable policies and procedures.

Moreover, the VFTC is not just limited to on-call hours. Time spent providing other services to a fire department in the capacity of a volunteer firefighter, such as repairing and maintaining vehicles and equipment, could also qualify as eligible volunteer firefighter services. However, activities similar to general community fundraising activities do not qualify unless they directly involve the use of firefighting training, skills, or equipment.

In Nunavut, the Volunteer Firefighters’ Tax Credit is specifically addressed in the Nunavut Information Guide, highlighting eligibility conditions such as residency in Nunavut at the end of the year and a minimum of six months of volunteer firefighting service without receiving salary, wages, or compensation other than reasonable reimbursement or allowance for expenses.

The VFTC represents a tangible acknowledgment of the vital contributions made by volunteer firefighters to their communities. By providing a tax credit, the Canadian government offers a form of support and recognition for the selfless services rendered by these individuals, encouraging continued volunteerism in this critical area. Volunteer firefighters are encouraged to consult with their fire departments and the CRA to ensure they meet the eligibility criteria and properly claim the VFTC on their tax returns.

This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2024 Shajani CPA.

Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning service.