Principal Issues: Whether it is possible to exempt police officers from having tax withheld in respect of amounts that qualify for the deduction under 110(1)(f)(v) of the Act.
Position: Yes.
Reasons: ITR 102(6) provides that no tax shall be deducted or withheld in the year by an employer from an amount determined in accordance with subparagraph 110(1)(f)(v) of the Act.
XXXXXXXXXX 2010-037932 T. Posadovsky, CMA (613) 952-8283 September 2, 2010
Dear XXXXXXXXXX :
Re: Tax Withholding on Income Subject to the Canadian Forces Personnel and Police Deduction.
We are writing in reply to your correspondence dated August 25, 2010, wherein you suggest that the Canada Revenue Agency (the "CRA") provide an exemption from tax withholdings for Royal Canadian Mounted Police ("RCMP") officers who qualify for the Canadian Forces personal and police deduction under subparagraph 110(1)(f)(v) of the Income Tax Act (the "Act").
Effective for 2004 and later taxation years, members of the Canadian Forces and Canadian police officers are entitled to tax relief under subparagraph 110(1)(f)(v) of the Act with respect to employment income and allowances received while deployed outside Canada on high risk and certain moderate risk missions. This tax relief is in addition to any non-taxable allowances that may be received by an individual while serving on such missions. Whether a specific RCMP officer is serving on a mission which would qualify for the deduction available under subparagraph 110(1)(f)(v) is a question of fact to be determined in each particular case.
Employers are responsible for deducting, remitting, and reporting payroll deductions in respect of their employees, including deducting income tax from remuneration or other income paid. In special situations, an employee can file form T1231, Request to Reduce Tax Deductions at Source, and obtain a Letter of Authority issued by the CRA so that their employer will reduce remuneration on which they have to deduct tax. However, in the case where an individual qualifies for the Canadian Forces personal and police deduction, such as in the circumstances you described in your letter, obtaining the Letter of Authority is unnecessary. This is because subsection 102(6) of the Income Tax Regulations provides that no tax shall be deducted or withheld in the year by an employer from an amount determined in accordance with subparagraph 110(1)(f)(v) of the Act.
We trust our comments will be of assistance to you.
Yours truly,
Randy Hewlett
Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch