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: In a particular situation, whether some portion of paid leave can be considered sick leave such that, upon retirement, payment in respect of sick leave component of paid leave will qualify as a retiring allowance.
Position: No.
Reasons: Question of fact whether some portion of payment is in respect of sick leave and employer has said that none of payment is in respect of sick leave.
XXXXXXXXXX 2001-011329
R. Albert
February 15, 2002
Dear XXXXXXXXXX:
Re: Retiring Allowance
We are writing in reply to your correspondence of November 14 and December 14, 2001, wherein you requested our views on whether any part of a payment upon retirement for paid leave could be considered to relate to unused sick leave credits and, accordingly, qualify as a retiring allowance.
XXXXXXXXXX
As you are aware, paragraph 5 of Canada Custom and Revenue Agency's Interpretation Bulletin IT-337R3, entitled 'Retiring Allowances', states: "To qualify as a retiring allowance, a payment must be in recognition of long service or in respect of loss of an office or employment. The term "long service" is usually considered to have reference to the total number of years in an employee's career with a particular employer or with affiliated employers. A payment for unused sick leave credits qualifies as a retiring allowance (see J. Camille Harel v. The Deputy Minister of Revenue of the Province of Quebec (77 DTC 5438, [1977] CTC 441)). On the other hand, a payment for accumulated vacation leave is considered to be ordinary remuneration and included in the employee's income in the year of receipt pursuant to subsection 5(1) and 6(3)."
Determination of whether a particular payment is a payment of unused sick leave is a question of fact which, in this situation, would best be resolved by the parties to the Paid Leave Policy based on their understanding of the intent of the agreement. Generally, payments of unused sick leave would be documented and supported by payroll records and based on collective agreements. Based on the information submitted, CCRA would not take a view different from that expressed by XXXXXXXXXX in his July 13, 2001 letter.
We trust that these comments will be of assistance.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy & Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2002
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2002
Email this Content