Income Tax Severed Letters

Principal Issues: Clarification of prior comments in CRA technical interpretation 2020-0864831I7 regarding a grant of restricted share units with intrinsic value at the date of grant to an employee early in the taxation year of the employer and the availability of the three year bonus exception in paragraph (k) of the definition of salary deferral arrangement.

Position: Question of fact; clarification provided.

Reasons: There is a rebuttable presumption that restricted share units with intrinsic value at the date of grant are in respect of past services rendered prior to that date. Regard will be given to any relevant documentation or agreement in ascertaining when the services were rendered. However, such documentation or agreement, in and of itself, would not be determinative. The fiscal year of the hypothetical employer in technical interpretation 2020-0864831I7 coincided with the calendar year.