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: Whether the CRA accepts, based on the TCC decision in 489599 B.C Ltd, 2008 TCC 332(TCC), that five employees plus one or more part-time employees will satisfy the "more than five full-time employees" tests in the definitions of "specified investment business" and "personal service business" in ITA 125(7) and the "more than five employees" test in the definition of "investment business" in ITA 95(1)
Position: Yes
Reasons: The law
2008 TEI - Question 5
Question 5
In 489599 B.C. Ltd. v. The Queen, 2008 TCC 332 (TCC), a CCPC had five full-time employees and two part-time employees. The issue was whether the CCPC employed "more than five full-time employees" for purposes of the definition "personal services business" set forth in subsection 125(7). The Tax Court of Canada concluded that the CCPC did have more than five full-time employees, i.e. that the provision did not require it to employ at least six full-time individuals, as indicated in paragraph 15 of IT-73R6, The Small Business Deduction. Does the CRA agree with the interpretation given by the Tax Court of Canada in 489599 B.C. Ltd.? If so, will the CRA also accept this interpretation for purposes of the "more than five full-time employees" test in the definition of "specified investment business" in subsection 125(7) and the "more than five employees full time" test in paragraph (c) of the definition of "investment business" in subsection 95(1)?
CRA Response 5
The CRA accepts the decision in 489599 B.C. Ltd that, in determining whether a corporation is carrying on a "personal services business" as defined in subsection 125(7), the requirement in paragraph (c) of the definition that the corporation employs "more than five-full time employees" is met when a corporation has five full-time employees plus one or more part-time employees. This interpretation is also applicable in determining whether or not the "more than five full-time employees" requirement in the definition of "specified investment business" in subsection 125(7) or the "more than five employees full time" requirement in paragraph (c) of the definition of "investment business" in subsection 95(1) is satisfied. This supersedes the positions set out in paragraph 15 of IT-73R6 and any technical interpretation issued by the CRA prior to the decision in 489599 B.C. Ltd.
C Rafuse
Tel. (613) 948-2226
March 5, 2009
File No. 2008-030058
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