| Mr. Owen Brophy | |
| SFL Steering Committee | |
| Treasury Board of Canada | File No. 5-8618 |
| 4th Floor, West Tower | F. Francis |
| Esplanade Laurier | 957-3496 |
| 300 Laurier West | |
| Ottawa, Ontario | |
| K1A 0R5 |
September 25, 1989
Dear Mr. Brophy:
Re: Revenue Canada - Customs and Excise Proposed Self-funded Leave Plan (the "Plan")
This is in reply to your letter of September 1, 1989 wherein you requested our opinion as to whether the Plan would meet the requirements of a prescribed plan under paragraph 6801(a) of the Income Tax Regulations (the Regulations) for purposes of the definition of salary deferral arrangements in subsection 248(1) of the Income Tax Act.
Our review of the Plan indicates that, with the exception of paragraph 28, the provision contained therein are in accordance with the Regulations.
Paragraph 28 of the Plan gives the employees the right to withdraw from the Plan for any reason no later than six months prior top the planned leave by giving notice to the employer. This provision may indicate that the main purpose of the Plan is not to permit the employees to fund leave of absence form employment but rather to defer taxes. As a consequence thereof, the Plan should be amended to accord the employee the right tot withdraw funds only in the case of financial or other hardship.
Provided that the Plan is amended as noted above, it is our opinion that the Plan will be a prescribed plan under paragraph 6801(a) of the Regulations.
We trust the above comments will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate