25 July 2011 External T.I. 2011-0411921E5 - Canadian Forces Personnel and Police Deduction

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.

Principal Issues: Whether it is possible to exempt individuals from having to file Form T1213 and obtain a Letter of Authority so that tax will not need to be withheld by employers on amounts paid that qualify for the deduction under 110(1)(f)(v) of the Act.

Position: No special exemption is required.

Reasons: ITR 102(6) provides that no tax shall be deducted or withheld in the year by an employer from an amount determined to be in accordance with subparagraph 110(1)(f)(v) of the Act.

XXXXXXXXXX
									2011-041192
									Andrea Boyle, CGA
July 25, 2011

Dear XXXXXXXXXX :

Re: Tax Withholding on Income Subject to the Canadian Forces Personnel and Police Deduction.

I am writing in reply to your correspondence dated June 16, 2011, wherein you have requested an exemption from the requirements to complete Form T1213 Request to Reduce Tax Deductions at Source and to obtain a Letter of Authority for police officers who have been seconded to the Royal Canadian Mounted Police on peace-keeping missions. These officers qualify for the Canadian Forces personal and police deduction under subparagraph 110(1)(f)(v) of the Income Tax Act (the "Act").

Effective for 2004 and later taxation years, members of the Canadian Forces and Canadian police officers are entitled to tax relief under subparagraph 110(1)(f)(v) of the Act with respect to employment income and allowances received while deployed outside Canada on high risk and certain moderate risk missions. This tax relief is in addition to any non-taxable allowances that may be received by an individual while serving on such missions. Whether a specific police officer is serving on a mission which would qualify for the deduction available under subparagraph 110(1)(f)(v) is a question of fact to be determined in each particular case. The police officer's employer (i.e. the particular policing authority) is generally in the best position to make this determination.

Employers are responsible for deducting, remitting, and reporting payroll deductions in respect of their employees, including deducting income tax from remuneration or other income paid. In special situations, an employee can file form T1231, Request to Reduce Tax Deductions at Source, and obtain a Letter of Authority issued by the CRA so that their employer will reduce remuneration on which they have to deduct tax.

However, in the case where an individual qualifies for the Canadian Forces personal and police deduction, such as in the circumstances you described in your letter, filing a form T1231 and obtaining the Letter of Authority are unnecessary. This is because subsection 102(6) of the Income Tax Regulations provides that no tax shall be deducted or withheld in the year by an employer from an amount determined in accordance with subparagraph 110(1)(f)(v) of the Act.

We trust our comments will be of assistance to you.

Yours truly,

Randy Hewlett
Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch