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: Whether the taxpayer is eligible for the overseas employment tax credit
Position: No
Reasons: His specified employer did not carry on business outside Canada under a contract with respect to qualified activities and not all or substantially all of the duties performed by the taxpayer is with respect to qualified activities
October 27, 2000
Edmonton Tax Services Office International Section
International Tax Section S. Leung
957-2115
Attention: Albert Iacovone
2000-003400
Overseas Employment Tax Credit ("OETC")
XXXXXXXXXX (the "Taxpayer")
We are writing in reply to your memorandum of June 26, 2000 in which you requested our view as to whether the taxpayer was eligible for the OETC for the year XXXXXXXXXX based on the information you provided. We also acknowledge the additional information you provided during our telephone conversation of September 19, 2000 (Iacovone/Leung).
Some of the essential information you provided are summarized as follows:
1. The taxpayer is a resident of Canada and a XXXXXXXXXX who is employed by XXXXXXXXXX was formed and has its head office in XXXXXXXXXX. It is owned XXXXXXXXXX% by XXXXXXXXXX which was incorporated and operates in XXXXXXXXXX, Canada.
2. XXXXXXXXXX.
3. XXXXXXXXXX.
4. It is your view that less than 90% of the duties of employment performed by the taxpayer outside Canada was in respect of qualified activities (i.e., those activities delineated in subparagraphs 122.3(1)(b)(i) and (ii) of the Income Tax Act (the "Act"). In this regard, you have provided us some details of the duties performed by the taxpayer which we are not going to reiterate here. In a nut shell, it is suffice to say that the taxpayer spent more than 10% of his time on administration and supervisory activities, travels, technical conferences, contracts and relationship building with XXXXXXXXXX.
One of the conditions for a taxpayer to qualify for the OETC is that he has to perform "all or substantially all of the duties of his employment outside Canada in connection with a contract under which the specified employer carried on business outside Canada" with respect to certain qualified activities. In this case the specified employer of the taxpayer is XXXXXXXXXX. It does not seem to carry on any business under a contract with respect to qualified activities. Therefore, we do not think that all the conditions described in subsection 122.3(1) of the Act are met.
Even if XXXXXXXXXX were considered to be carrying on business outside Canada under a contract with respect to qualified activities (which in our view is not the case), after reviewing the information you provided, we agree with you that not all or substantially all of the duties performed by the taxpayer was in connection with such a contract.
Therefore, we are of the opinion that the taxpayer is not eligible for the OETC.
If you have any question regarding the above, please do not hesitate to contact us.
for Director
Reorganizations and International Division
Income Tax Rulings Directorate
Policy and Legislation Branch
P.S.: 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 CCRA's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their database. 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. Request 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.
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