5 June 1990 Income Tax Severed Letter ACC9458 - Leave with Salary Holdback Plan

DATE July 5, 1990

TO  BELLEVILLE DISTRICT OFFICE       FROM   HEAD OFFICE
    Dan Woodin, Director                    Financial Industries 
                                              Division
    Attention:  Mrs. Rosebush               D.S. Delorey
                Source Deductions           957-3495
                                      FILE  7-901062

SUBJECT:      24(1)
         Leave With Salary Holdback Plan
         Section 6801 of the Income Tax Regulations

Your memorandum of May 18, 1990 addressed to Room 8000, 400 Cumberland Street has been referred to this office for reply.

Your enquiry relates to subparagraph 6801(a)(i) of the Regulations and the requirement that a prescribed arrangement must provide for a leave of absence of at least 6 consecutive months. With regard thereto, the taxpayer asks if the 6 consecutive months can rum from August 1 to January 31, or February 1 to July 31, given that its teachers are contracted for 12 months.

It is our view that the term "leave of absence" connotes a period of time during which an employee would normally be required to report for work (i.e., to perform the duties of the office or employment) but for which he/she has requested and been granted permission to be absent, with or without pay. It is our understanding that the subject teachers are not required to report for work during the months of july and August. It is thus unnecessary to request or be granted permission to be absent for one or both of those months. To suggest otherwise is unreasonable in our view.

Thus, for a teacher who is not required to report for work during July and August, it is our view that the "6 consecutive months" requirement referred to above must be satisfied between September 1 and June 30.

The correspondence submitted with your enquiry is returned herewith.

Director Financial Industries Division Rulings Directorate

c.c. Assessing and Enquiries Directorate G. Venner, Director General