19 December 2016 External T.I. 2016-0643191E5 F - Deferred Salary Leave Plan (DSLP) -- summary under Subsection 5(1)

The deferred salary leave plan (“DSLP”) rules in Reg. 6801(a) permit a hybrid arrangement under which, during the employee’s leave, the employee first receives amounts whose recognition is deferred under the DSLP rules, and then receives advances of salary or wages which are to be earned after returning to work, with such amounts in both cases being included in the employee’s income under ss. 6(3) and 5(1). CRA then indicated that in this type of arrangement (or one where the employee only receives advances during the leave – in which case, it is not within the DSLP rules), the employee is entitled to a s. 8(1)(n) deduction as the advances are “repaid” (i.e., out of reduced pay cheques following the return to work).