9 May 2000 Internal T.I. 2000-0015017 - Locally engaged employee at Embassy

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.

Principal Issues: Taxability of locally engaged employee at embassy.

Position: In this particular fact situation, not taxable under Part I pursuant to 149(1)(a).

Reasons: See memo.

            May 9, 2000

Ottawa Tax Services Office    International Section
J. Stalker
Attention:  Phil Fortier      957-2118
            Team Leader, International Tax
      2000-001501

Locally Engaged Employee - XXXXXXXXXX

We are writing in response to your memorandum dated March 15, 2000 in respect of an employee of the XXXXXXXXXX Embassy.

Our understanding of the facts is as follows:

• The employee came to Canada in XXXXXXXXXX as a non-diplomatic employee of the XXXXXXXXXX.
• In XXXXXXXXXX she married a Canadian citizen, left the XXXXXXXXXX civil service and became a locally engaged employee of the XXXXXXXXXX Embassy.
• She paid XXXXXXXXXX social security and income tax on her embassy earnings.
• She did not become a Canadian citizen.
• The taxpayer advises in her letter to the Ottawa TSO dated January 19, 2000 that she has been employed by the XXXXXXXXXX Department of Foreign Affairs (XXXXXXXXXX ) continuously since XXXXXXXXXX and was posted at Ottawa in XXXXXXXXXX. She has been employed at the XXXXXXXXXX Embassy in Ottawa since XXXXXXXXXX. She further explains:

XXXXXXXXXX.

Our view

We note that, even though this employee's status changed to a locally engaged employee of the embassy, her "duties" did not change as she continued in the same work at the Embassy. Therefore, it is our view that she can be considered to have resided outside Canada immediately before assuming those duties, that is, in XXXXXXXXXX. As a result she would be exempt from Part I tax in Canada pursuant to paragraph 149(1)(a) of the Income Tax Act (Canada), for the entire period she has worked at the Embassy, assuming all the other criteria in that paragraph are met.

We trust our comments will be of assistance. Please call the writer if you have any further questions.

For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on the Canada Customs and Revenue Agency's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at 819-994-2898. The severed copy will be sent to you for delivery to the client.

for Director
Reorganizations and International Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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