8 February 1990 Ministerial Letter 59508 F - Deferred Salary Leave Plan

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.

February 8, 1990

Dear Sirs:

Re:  24(1) Deferred Salary Leave Plan  ("Plan")

This is in reply to your letters dated January 23 and February 2, 1990 in which you requested our approval of the Plan, and of a proposed amendment thereto.

for your information there is no requirement under the Income Tax Act or the Income Tax Regulations ("Regulations") that your Plan be approved by this Department or by any other person. Accordingly, in the absence of statutory authority to do so, we are not in a position to approve those Plans that have satisfied the requirements of paragraph 6801(a) of the Regulations.

Further, we wish to inform you of our recently developed positions concerning Unemployment Insurance ("UI") premiums and Canada Pension Plan ("CPP") contributions paid in respect of employees who are participants under a deferred salary leave plan ("DSLP").  It is our position that

(i)       UI premiums are to be based on the employee's gross salary before deferrals during the period of deferral and no premiums are to be withheld from the deferred amounts when paid to the employee during the leave period.

(ii)      CPP premiums are to be based on the employee's salary net of the deferred amounts during the period of deferral and on the deferred amounts during the period of deferral and on the deferred amounts when paid to the employee during the leave period.  When the deferred amounts are paid t the employee by a trustee of the DSLP during the leave period, that trustee is deemed by the CPP to be an employer of that employ and is therefore required t pay the employer's CPP contributions in respect of that employee.  Where the trustee/employer recovers the employer's CPP contributions form amounts otherwise payable to the employee, it is our view that this recovered amount will not be part of the employee's gross salary form that trustee/employer and therefore need not be included on the employee's T4 slip.

24(1)

We suggest that you contact your local district taxation office with respect to any necessary adjustments to UI premiums contributed since the implementation of your Plan.

Concerning the proposed amendments to your Plan for employees who transfer to or from other plans that meet all the requirements of section 6801 of the Regulations, subject to approval by designated persons, such amendments are acceptable provided the arrangement between the employer 24(1) and each such transferred employee, throughout its term complies fully with the requirements of section 6801 of the regulations.

We trust that our comments are sufficient for your purposes.

Yours truly,

for directorFinancial Industries DivisionRulings Directorate