Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
DM'S OFFICE (2) YS # 95-0897M
ASSOCIATE DEPUTY MINISTER (1)
ADM'S OFFICE (3)
PENDING
RETURN TO 15TH FLOOR, ALBION TOWER
Signed on February 9, 1996
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable David Anderson, Minister of National Revenue, has asked me to reply to your letter of November 23, 1995, concerning deferred salary leave plans. I apologize for the delay in responding.
In your letter you request clarification of the reasons why an employee must return to his or her regular employment after a leave of absence, for a period that is not less than the leave of absence, before the salary deferral arrangement may qualify under Regulation 6801 of the Income Tax Regulations. You also suggested that a return for 70 days, similar to the condition in the Ontario Teachers Pension Act, would be more reasonable because it would allow a participant to retire after returning for one semester, opening a position for a new employee.
The Regulations were developed in response to representations made to the Minister of Finance by teacher's groups, university professors, school boards and other associations that typically grant sabbatical leaves to their employees, to allow leaves of absence to be funded through salary deferral. It was agreed that an arrangement should be established to fund a bona fide leave of absence and not to provide benefits to a participant on or after retirement. Accordingly, the Department of Finance recommended that a condition be included requiring a participant to return to his or her regular employment for a period at least equal to the leave period in order to ensure that the arrangement is not designed or used to provide benefits on or after retirement.
Amendments to the Income Tax Regulations are the responsibility of the Department of Finance. Therefore, I have forwarded your letter to the Honourable Paul Martin, Minister of Finance, for his consideration of your suggestion that the regulation be harmonized with the Ontario Teachers Pension Act.
I appreciate the opportunity to respond to your concerns.
Yours sincerely,
Pierre Gravelle, Q.C.
M. Sarazin
957-2131
960167
January 19, 1996