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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Are amounts paid by a corporation to non-resident directors, in respect of deferred share units, for services rendered outside Canada, deductible in computing the corporation's income?
Position: Yes.
Reasons: Subject to paragraph 18(1)(a) and section 67 of the Act, the amounts paid, in respect of the deferred share units, are deductible by a corporation in accordance with section 9 of the Act.
XXXXXXXXXX 2001-011284
January 25, 2002
Dear XXXXXXXXXX:
Re: Deductibility of Amounts Paid from a Deferred Share Unit Plan to
Non-Resident Directors in Respect of Services Rendered Outside Canada
This letter is further to our telephone conversation of November 21, 2001 (XXXXXXXXXX/Allen), concerning a corporation's ability to deduct from their income amounts paid, in respect of deferred share units, to non-resident directors for services rendered outside Canada. Examples of services rendered outside Canada include attendance at director's meetings outside Canada and preparation outside Canada for attendance at director's meetings held in Canada.
In our view, subject to paragraph 18(1)(a) and section 67 of the Income Tax Act (the "Act"), amounts paid in a year by a corporation to non-resident directors, in respect of deferred share units accumulated under a prescribed plan or arrangement as defined under paragraph 6801(d) of the Income Tax Regulations, for such services rendered outside Canada, are deductible in calculating a corporation's income in accordance with section 9 of the Act.
We trust the above comments are of assistance.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
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