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.
JAN 10 1990
Specialty Rulings Directorate J.D. Jones (613) 957-2104
SUBJECT: XXXX OBJET: - Deemed Benefit Section 80.4 of the Income Tax Act (the "Act")
FILE DOSSIER 7-4557
This is in reply to your memorandum of November 24, 1989, regarding the above-noted subject which has been forwarded to this Directorate for reply. You have asked us to confirm if it is still our view that certain temporary advances of XXXX to their employees are not considered to be "otherwise incurring a debt" within the meaning of section 80.4 of the Act.
You attached to your memorandum copies of two letters from the Chief of Source Deductions from the Toronto District Office indicating that discussions had taken place with (then) Non-Corporate Rulings Division concerning this issue and that it was our view that the advances are not viewed as "otherwise incurring a debt" within the meaning of section 80.4 of the Act but, rather, are benefits brought into income pursuant to paragraph 6(1)(a) of the Act. The above mentioned letters also stated that the Department would administratively allow any part of an existing advance not paid back in the year to be carried forward to the following year.
Based upon the above, we advise that we are of the view that the advances made to the employees in this situation are not viewed as "otherwise incurring a debt" within the meaning of section 80.4 of the Act and, accordingly, are not subject to the taxing provisions contained therein. We are also of the view that those advances are properly included in the income of the employees pursuant to paragraph 6(1)(a) of the Act in the year of receipt of such advances.
As you have taken an administrative position whereby these advances are included in the employee's incomes in the year following the year df receipt XXXX calculating the actual amount of the advance which should have been paid the employees in the following year) you may wish to confirm the continuance of this policy with the Source Deductions Division prior to informing the taxpayer.
ORIGINAL SIGNED BY ORIGINAL SIGNÉ PAR
P.D. FUOCO for Director Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
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© His Majesty the King in Right of Canada, 1990
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© Sa Majesté le Roi du Chef du Canada, 1990
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