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.
Principal Issues: How do participants in a joint venture include salaries and wages in the calculation in subparagraph 402(3)(a)(ii) of the Regulations?
Position: A corporation involved in a joint venture would include its share of the salaries and wages of the joint venture employees that are directly paid by the corporation.
February 18, 2005
Bert Riverso HEADQUARTERS
Legislative Policy Directorate Shaun Harkin
22nd floor, 320 Queen St. 957-9229
Attention: Terry Young
Technical Interpretation Request: Taxable Income Earned in a Province
We are writing in reply to your email of February 8, 2005 requesting our views on your understanding of our letter dated October 8, 2002 (document E 2002-0139335).
We agree with your understanding. In determining its "income earned in the year in a province" under Part IV of the Income Tax Regulations, a corporation involved in a joint venture would include in the calculation set out in subparagraph 402(3)(a)(ii) of the Income Tax Regulations its share of the salaries and wages of the joint venture employees that are directly paid by the corporation to the employees of the permanent establishment in the province. Normally, that would occur where the corporation is legally responsible for paying the employee. We agree with your view that amounts reimbursed between corporate joint venture participants would not affect the calculation in subparagraph 402(3)(a)(ii) as these amounts would not be "salaries and wages paid in the year by the corporation to employees...".
We trust the above comments are of assistance.
Wayne Antle, CGA
Business and Partnerships Division
Income Tax Rulings Directorate
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