17 February 1994 External T.I. 9401105 - RETIRING ALLOWANCE IF REHIRED

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

RULINGS DIRECTORATE
CORRESPONDENCE SUMMARY

DOCUMENT TYPE:

Opinion

Principal Issues:

Whether payment is a retiring allowance where employee is rehired as independent contractor.

Position TAKEN:

No opinion - question of fact.

Reasons FOR POSITION TAKEN:

Routine

LEGAL:

FINANCE OPINION:

JURISPRUDENCE:

RCT PUBLICATIONS:

HAA NUMBER:

4749-3

XXXXXXXXXX 940110

Attention: XXXXXXXXXX

February 17, 1994

Dear Sirs:

Re: Retiring Allowances

This is in reply to your letter of January 13, 1994, in which you ask for our opinion concerning the characterization of payments by an employer in three differing fact situations.

Written confirmation of the tax implications inherent in particular transactions are given by this directorate only where the transactions are proposed and the subject of an advance tax ruling request submitted in the manner set out in Information Circular 70-6R2. Where the particular transactions are completed, the enquiry should be addressed to the relevant district taxation office. We can provide, however, the following general comments which are not binding on the Department.

Retiring allowance is defined in subsection 248(1) of the Income Tax Act (the "Act") to mean an amount received upon or after retirement from an office or employment in recognition of one's long service, or in respect of a loss of office or employment. As noted in paragraph 4 of Interpretation Bulletin IT-337R2, retirement or loss of employment does not include transfer from one office or position to another with the same employer.

With respect to the situations described in your letter, it is a question of fact whether an individual has suffered a loss of employment with an employer when the present employment contract is terminated, but the individual later provides services under a new arrangement. The issue of whether an individual is an employee or an independent contractor is also a question of fact and can only be determined after an examination of the terms and conditions of the contract.

Yours truly,

for Director
Financial Industries Division
Rulings Directorate