5-911076
Dear Sirs:
Re: Deferral Salary Leave Plan Section 6801 of the Income Tax Regulations (the "Regulations")
This is in reply to your letter of April 15, 1991 concerning the above-mentioned subject.
Where, under an arrangement in writing established prior to July 28, 1986 (as described in paragraph 6801(b) of the Regulations), an employee decides part way through a deferral period that he/she no longer intends to take a leave of absence, it is our view that it is reasonable to conclude that the main purpose of the arrangement has been altered so that it would no longer qualify under paragraph 6801(b) of the Regulations. Accordingly, on the assumption that the main purpose of the altered arrangement is to defer taxes payable in respect of salary or wages for services rendered by the taxpayer, it is our view that the arrangement would become a salary deferral arrangement as defined in subsection 248(1) of the Income Tax Act.
The foregoing comments are an expression of opinion only, and are not binding on this Department, however, we trust they are of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate