INNISFAIL - Local council members will soon lose the legal perk of having one-third of their salaries exempted from federal taxes.
Town council was officially reminded of the change to the long-standing federal tax exemption, first introduced under the Federal Income Tax Act in 1946, at its Organizational Meeting on Oct. 22 through a report by Todd Becker, the town's chief administrative officer.
"For 2019 and later tax years, non-accountable allowances paid to elected officers will be included in their income," said Becker in his report.
The change was made in March 2017 when the federal government passed Bill C-44, which eliminated the one-third tax exemption for elected provincial and municipal officials in Canada.
Currently Mayor Jim Romane earns a base salary of $32,400 a year, with the six councillors each earning an annual salary of $15,600. The salaries for the mayor and all councillors are topped off with $210 (full day) and $105 (half day) per diems for every meeting they attend. They also receive an annual cost of living allowance increase, travel expenses and town-paid premiums for a benefits package that includes extended health care and dental care.
"It is going to affect them because they are going to have to pay tax on it," said Heather Whymark, the town's director of corporate services. "However, where the problem runs into is if the individuals on council work as well. They don't get to take off that one-third anymore and they have to add that into all their income."
"It's not big dollars," added Whymark, noting Romane, who is retired from the private workforce, will have to claim tax on about $10,000 of his mayor's salary that he has not had to do before. "It sounds big but when you calculate it out it is not that bad."
Coun. Doug Bos still has income outside of council as co-owner of Discovery Wildlife Park. He said the loss of the one-third exemption will have an impact for him.
"We will end up having to pay a whole bunch more on tax that is for sure," said Bos, adding he did not run for public office for the money. "It's not great but at the end of the day there is not a whole bunch we can do about it.
"I don't see us raising our wages as councillors to compensate for it," he said. "It is going to cost us more money, no doubt about it. It will put us in a higher tax bracket. We will pay more money. I think it will affect people on fixed incomes a whole lot more."
Coun. Jean Barclay, who is retired from the private workforce, said she has no problem with the loss of the tax exemption.
"I don't know why public officials should get any special exemption. I didn't run for town council because of the money you make from it," said Barclay, who noted a review of council remuneration is expected next year.
Becker's report on Oct. 22 did confirm an ad hoc committee will be created in 2019 to conduct a mid-term review of council remuneration and benefits.
Whymark said the committee will have the option of increasing pay for council members to offset the loss by the tax change, or increase the cost of living allowance, or do nothing.
She said for her 2019 budget purposes she is not putting in a council pay increase to offset any monetary loss caused by the elimination of the tax exemption.
