Principal Issues: Whether the World Bank is a prescribed international organization for purposes of subparagraph 110(1)(f)(iii) of the Act.
Position: Yes.
Reasons: The World Bank is one of the specialized agencies prescribed in paragraph 8900(1)(b) of the Regulations.
2007-026231 XXXXXXXXXX A. Seidel, CMA (613) 957-2058 January 4, 2008
Dear XXXXXXXXXX:
Re: Prescribed International Organization
This is in response to your e-mail of December 7, 2007 in which you requested our comments regarding the eligibility of one of your clients for a deduction under paragraph 110(1)(f) of the Income Tax Act (the "Act"). In particular, you asked us if the World Bank is a "prescribed international organization" for the purposes of subparagraph 110(1)(f)(iii) of the Act. The "World Bank" is the name that is commonly used to describe the International Bank for Reconstruction and Development and the International Development Association.
The situation outlined in your letter relates to the employment contract of a specific taxpayer. It is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. For more information about how to obtain a ruling, please refer to Information Circular 70-6R5, "Advance Income Tax Ruling", dated May 17, 2002. This Information Circular and other CRA publications can be accessed on the Internet at http://www.cra-arc.gc.ca. Where the employment contract of a specific taxpayer is in respect of a completed transaction, you should submit all relevant facts and documentation to the appropriate Tax Services Office ("TSO") for their views. A list of TSOs is available on the "Contact Us" page of the CRA website. Although we cannot comment on your specific situation, we are prepared to provide the following general comments.
Subparagraph 110(1)(f)(iii) of the Act allows a taxpayer to deduct, in computing taxable income for a taxation year, any amount that is income from employment with a prescribed international organization. Subsection 8900(1) of the Income Tax Regulations defines prescribed international organization to include "each international organization that is a specialized agency brought into relationship with the United Nations in accordance with Article 63 of the Charter of the United Nations." Article 63 of the Charter of the United Nations ("Charter") provides that the Economic and Social Council of the United Nations may enter into agreements with any of the agencies referred to in Article 57 of the Charter defining the terms on which the agency concerned shall be brought into relationship with the United Nations. Article 57 of the Charter states that the various specialized agencies, established by intergovernmental agreement and having wide international responsibilities, as defined in their basic instruments, in economic, social, cultural, educational, health, and related fields, shall be brought into relationship with the United Nations in accordance with the provisions of Article 63. The agencies brought into a relationship with the United Nations are referred to as specialized agencies. These specialized agencies include, among others, the World Bank. Accordingly, we are of the view that the World Bank is a "prescribed international organization" for the purpose of subparagraph 110(1)(f)(iii) of the Act.
We trust these comments will be of assistance.
Yours truly,
Daryl Boychuk
for Director
International & Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch