24(1)
5-911899
Subject: 24(1)
24(1) we have advised them to contact you in case they require assistance in determining whether the amounts received by the taxpayer were "salary or wages" within the meaning of Regulation 6801 of the Income Tax Act the "Act").
In addition to the Interpretation Bulletins to which reference is made in our letter, you may wish to refer to VC-89-3 on research grants concerning factors to be considered in determining the nature of the income. If 19(1) you are satisfied that the amounts are income within the meaning of section 5 of the Act, then 19(1) has failed to comply with the requirements of the Act governing prescribed salary deferral leave plans, and you will have to decide if this is a proper case to grant administrative relief.
Regulation 6801 does not provide for the situation where an employee of an educational institution intends to enrol at that institution during his or her leave of absence. In these cases the Student/employee is unable to benefit from some of the forms of financial assistance available to other students if the assistance can be clarified as employment income. This problem does not arise where the employee goes to another educational institution, and it might be argued that this unfairly penalizes the taxpayer.
Please contact us if you require any further assistance.
for DirectorFinancial Industries DivisionRulings Directorate