9 May 1991 Income Tax Severed Letter

24(1)                    5-911076
                                        M. Shea-DesRosiers
                                        (613) 957-8953

               19(1)

May 9, 1991

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 Director Financial Industries Division Rulings Directorate

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