RULINGS DIRECTORATE CORRESPONDENCE SUMMARY
PRINCIPAL ISSUES:
Whether dslp meets requirements of ITR 6801(a)
POSITION TAKEN:
Yes, except 6801(a)(iii)
REASONS FOR POSITION TAKEN:
Routine
LEGAL:
FINANCE OPINION:
JURISPRUDENCE:
RCT PUBLICATIONS:
HAA NUMBER:
7680-4-2
February 1, 1994
Head Office Head Office Source Deductions Division Rulings DirectorateA. Bissonnette, Director (613) 957-8953
Attention: R. Cousineau
DO & TC Support Services
Deferred Salary Leave Plan
This is in reply to your memorandum of December 21, 1993, in which you ask us to review and comment on a deferred salary leave plan (the "Plan") submitted to the XXXXXXXXXX
Our comments follow.
The Plan contains all the elements required under paragraph 6801(a) of the Income Tax Regulations (the Regulations) except for the prohibition described in subparagraph 6801(a)(iii) of the Regulations. Article XXXXXXXXXX of the Plan should be amended to state that throughout the period of the leave of absence the employee will not receive any salary or wages from the Board, or from any other person or partnership with whom the Board does not deal at arm's length.
In Article XXXXXXXXXX of the Plan, it is indicated that all salary related benefits must be maintained at the 100% salary level. We are not sure what benefits would be covered by this description but wish to point out that Canada Pension Plan contributions are made based on the reduced salary received in the years of deferral and on the deferred amounts received in the year of the leave of absence. Enclosed is ATR- 39 for the Board's information, and reference is made in particular to the Editor's Note on pages 6 and 7.
We would be pleased to respond directly to any client queries you or the district offices receive concerning technical interpretations of paragraph 6801(a) of the Regulations, including requests to review draft deferred salary leave plans to ensure conformity with the Regulations.
for DirectorFinancial Industries DivisionRulings Directorate