| 19(1) | File No. 5-8221 |
| W.C. Harding | |
| (613) 957-3499 |
June 27, 1989
Dear Sir,
This is in reply to your letter of June 8, 1989 wherein you requested our review of your proposed self-funded leave plan for elementary teachers and our advice on its acceptability for tax deferral purposes.
Self-funded leave plans entered into by an employee and his employer must, since 1986, comply with the requirements of section 6801 of the Income Tax Regulations (the "Regulations") in order for the employee to defer taxation on any salary deferrals made under its provisions. A copy of Regulation 6801 is enclosed for your review.
It is our opinion that your proposed plan does not comply with the provisions of the Regulations for a number of reasons and therefore, at this time, any comments we could make would be of limited assistance to you. Instead, we suggest that you redraft the plan having close regard to the specifics of the Regulations. Having done this, we would be happy to then review the plan and offer our comments thereon.
We would, however, note that the secondary teachers' plan referred in your letter must, since 1986, also comply with the provisions of subsection 6801(a) of the Regulations except in cases where a specific teacher entered into the plan before July 28, 1986, the deferrals were started before 1987 and the plan was established for the purposes described in subsection 6801(b) of the Regulations.
We trust that these comments will be of assistance to you.
Yours truly,
for Director Financial Industries Division Rulings Directorate