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:
Can we provide various opinions regarding the taxation of benefits under various incentive plans that will be offered by a U.S. corporation to employees of a related Canadian corporation?
Position: No.
Reasons:
The opinions would relate to proposed transactions and the terms of the various incentive plans are not available. The client should request a ruling.
XXXXXXXXXX 2001-007078
M. P. Sarazin, CA
March 6, 2001
Dear XXXXXXXXXX:
Re: Incentive Program for Canadian Employees
This is in reply to your letter of February 14, 2001, requesting a technical interpretation regarding the application of the Income Tax Act (the "Act") to various incentive plans that a U.S. corporation intends to offer to executives of a related Canadian corporation.
Opinions concerning proposed transactions involving specific taxpayers will only be provided in response to a request for an advance income tax ruling. For more information concerning advance tax rulings, please refer to Information Circular 70-6R4 dated January 29, 2001, issued by the Canada Customs and Revenue Agency (the "Agency"). Copies of information circulars and interpretation bulletins are available from your local tax services office or on the Internet at the following site - http://www.ccra-adrc.gc.ca/formspubs/menu-e.html. However, we can provide you with the following general comments.
The determination of whether benefits offered under a particular incentive plan would constitute a salary deferral arrangement, within the meaning assigned by subsection 248(1) of the Act, requires a review of all of the relevant facts including the terms of the particular incentive plan. We would make this determination if you submit a request for an advance income tax ruling in accordance with IC 70-6R4.
Where a participant in an incentive plan will receive shares of the employer corporation or of a corporation related to the employer corporation, the provisions of section 7 of the Act may apply to the acquisition of shares. The Agency's general views regarding stock options are found in Interpretation Bulletin IT-113R4. Please note that IT-113R4 does not reflect the proposed amendments to section 7 of the Act described in the Legislative Proposals and Explanatory Notes Relating to Income Tax published by The Honourable Paul Martin, P.C., M.P., Minister of Finance in December 2000.
We trust these comments will be of assistance.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
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