17 July 1987 Income Tax Severed Letter 5-3450 - [870717]

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.

R. B. Day (613) 957-2136

July 17, 1987

We are writing in reply to your letter of May 27, 1987. We will respond to the questions posed in your letter, in the order in which they appear.

Air conditioning equipment, prescribed by a physician for use by victims of multiple sclerosis, would not be considered to be equipment of a "prescribed kind" under subparagraph 110(1)(c)(xii) of the Income Tax Act (the "Act") because of the restrictions set out in paragraph 5700(c) of the Income Tax Regulations. This paragraph states, in part, that such equipment does not include "an air conditioner, humidifier, dehumidifier or air cleaner". As a consequence, costs incurred by taxpayers in the above situation would not be deductible as a medical expense under paragraph 110(1)(c) of the Act.

The recent amendment to subsection 248(1) of the Act, with respect to a "salary deferral arrangement", was enacted to prevent the postponement of "tax payable under the Act by the taxpayer in respect of an amount that is, or is on account or in lieu of, salary or wages of the taxpayer for services rendered by him in the year or the preceding taxation year". Since commission income of an employee-sales person is considered to be employment income, received for services rendered in the year, commission income would be considered as "salary or wages" for purposes of the definition of a "salary deferral arrangement".

Whether or not an arrangement whereby commission income is deferred to a subsequent year would meet this definition, would involve a finding of fact and depend on the specific terms set out in the agreement between employer and employee.

Should you have a factual situation involving a completed transaction and a specific taxpayer, you may wish to approach your local District Taxation Office for their views on the income tax implications of the arrangement.

Should you have a factual situation involving a specific taxpayer and a proposed transaction, you may wish to submit all relevant facts and documents for a binding advance income tax ruling.

Yours truly,

for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch