5-913325 24(1)
Dear Sirs:
Re: Deferred Salary Leave Plan (the "Plan"):
This is in response to your letter of November 26, 1991 requesting an advance income tax ruling on your deferred salary leave plan.
The Department will provide advance income tax rulings on proposed transactions if a request is made in accordance with the procedures in Information Circular IC 70-6R2. As explained by telephone on December 11, 1991 (19(1)/Duff), since the "Plan" is already implemented as part of your collective agreement, signed on, it is no longer a proposed transaction, and, accordingly, we cannot rule on it. Furthermore, a ruling is given on specific provisions of the Income Tax Act (the "Act") and we note that you did not make any specific references as to what we were to rule on.
However, we did review your plan as outlined in Appendix A to the Collective Agreement, 24(1)of this agreement as they pertain to the Plan, and we have the following comments. The last sentence of paragraph refers to a Canada Pension Plan contribution that will not form part of the employee's gross salary. This should refer to the portion paid by the employer and not the portion paid by the employee. It should indicate that to the extent that the employer/trustee recovers the employer's portion of CPP from amounts otherwise payable to the employee, that amount will not be considered income of the employee. Otherwise, in our opinion the plan complies with the provisions of paragraph 6801(a) of the Income Tax Regulations.
Your deposit will be returned under separate cover and we have included a copy of Advance Tax Ruling 39 which discuses a deferred salary leave plan similar to yours.
We trust this is satisfactory.
Yours truly,for Director Financial Industries DivisionRulings Directorate