27 September 2002 External T.I. 2002-0160095 - qualifying amount

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:

Follow-up inquiry to 2002-014329 on whether a retroactive lump-sum payment received as a result of a job classification process is a "qualifying amount" for the purposes of a deduction in the computation of taxable income under section 110.2 of the Income Tax Act (the Act). The follow-up specifically relates to whether the employer's job classification committee is a "competent tribunal" within the meaning of the definition of "qualifying amount".

Position:

No.

Reasons:

The words competent tribunal in the definition of qualifying amount in subsection 110.2(1) refers to a particular tribunal that has the legal jurisdiction to make the order or judgement.

XXXXXXXXXX 2002-016009

Randy Hewlett, B.Comm.

September 27, 2002

Dear XXXXXXXXXX:

Re: Technical Interpretation - Retroactive Lump Sum Payments

We are writing in response to your letter dated August 23, 2002, wherein you inquired about the opinion expressed in our letter of August 13, 2002 (our file 2002-014329), which was in response to your earlier correspondence of May 22, 2002 on the above-noted issue.

In your correspondence, you noted that the retroactive lump-sum payment you received was a result of a decision of your former employer's job classification committee. In your view, the classification committee is a "competent tribunal" for the purposes of the definition of "qualifying amount" under subsection 110.2(1) of the Income Tax Act (the Act). Therefore, you ask that we reconsider our opinion in your case.

Our Comments

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, Advance Income Tax Rulings. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following comments.

A lump-sum amount may be considered a "qualifying amount", as defined under subsection 110.2(1) of the Act, if it is received pursuant to "an order or judgment of a competent tribunal". In general terms, it is our opinion that a competent tribunal under this provision refers to one that has the legal jurisdiction to make an order or judgement. In this regard, a tribunal that has legal authority granted under a federal or provincial statute would clearly be considered a competent tribunal. A specific example of an amount that would be considered received pursuant to an order or judgment of a competent tribunal is a pay-equity award made by the Canadian Human Rights Tribunal (CHRT), since the CHRT has the legal authority to make such an award by virtue of the powers granted to it under the Canadian Human Rights Act. In our view, your employer's job classification committee would not be considered a "competent tribunal" for the purposes of the definition of qualifying amount under subsection 110.2(1) of the Act.

We trust our comments will be of assistance to you.

Yours truly,

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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