Under a sabbatical leave plan (the Plan):
- Participating employees elected to purchase credits towards a future sabbatical leave by deferring receipt of their salary for a specified number of days each year, with the employer matching this purchase by making a “notional contribution” towards the cost of the future sabbatical leave using a predetermined formula.
- The accrual period during which employees could elect to purchase such credits was between three and seven years, with the sabbatical leave to be taken no later than the seventh calendar year after the first year in which accruals commenced.
- Employee generally could elect to take a sabbatical leave corresponding to the number of weeks so purchased, together with the employer notional contributions, with their current salary being received for the duration of the leave, but with receipt of a top-up amount from the employer if their salary increased over the accrual period.
- If an employee’s employment terminates before taking the accrued sabbatical, the employer’s notional contributions would be forfeited and the employee would receive a lump-sum payment equaling the unrealized deferred salary.
CRA stated:
The Plan as described above will not meet the requirements of paragraph 6801(a) of the Regulations as a DSLP (for multiple reasons including the length and timing of the sabbatical leave and the notional employer contributions).