| 19(1) | 902795 |
| C. Tremblay | |
| (613) 952-1361 |
October 18, 1990
19(1)
Re: Payments to Spouse
This is in reply to your letter of September 28, 1990 and further to our letter of August 22, 1990, requesting an advance income tax ruling concerning proposed payments to your wife.
We are unable to rule in this matter, as what constitutes a salary in any particular circumstance is a question of fact. For your information we offer the following general comments.
Our Comments
It is our opinion that if your wife is performing, as an employee, a function on behalf of your professional practice that a reasonable salary based on the services rendered can be paid. A reasonable salary is usually considered to be an amount that you would pay another person doing a similar function.
With respect to the comments advanced by your accountant, 19(1) we do not share his views. All business expenditures have to meet the test that they were made or incurred for the purpose of gaining or producing income from the business in order to be deductible. As such it doesn't matter whether the person is your wife or not, only that the functions being performed are on behalf of the practice.
We hope these comments will be helpful.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch