CRA narrowly defines constructive receipt of employment income

Folio S2-F3-C1: "Payments from Employer to Employee," which mostly deals with s. 6(3), reflects significant revisions to IT-196R2. CRA has added a statement that s. 6(3) employment income can be "constructively received," and defines this situation as one where an "amount is credited to an employee’s debt or account, set apart for the employee or otherwise available to the employee without being subject to any restriction concerning its use."

CRA has added examples indicating that a signing bonus will be included even where the employee is subject to a potential obligation to repay the amount, and that an agreement at the time of hiring the employee to purchase her customer list on termination of employment also would give rise to employment income on the sale.

CRA has carried forward from IT-196R2 a statement that a payment which satisfies the specific s. 6(3) conditions will only be included in employment income if it has the "nature and quality" of employment income.

Neal Armstrong. Summaries of Folio S2-F3-C1: "Payments from Employer to Employee" under s. 6(3), s. 5(1) and s. 6(3.1).