13 September 1990 Administrative Letter 900946 F - Overseas Employment Tax Credit on Architectural Activities

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.

September 13, 1990

Dear Madam:

This is in reply to your letter dated May 17, 1990 whereby you requested our opinion as to whether architectural activities can be included as "any construction, installation, agricultural or engineering activity" pursuant to subparagraph 122.3(1)(b)(i)(B) of the Income Tax Act.  You also requested our opinion on whether architects who perform contract administration and whether architects who design can be considered to be performing activities consistent with section 122.3(1)(b)(i)(B) of the Income Tax Act.

We are of the opinion that generally architectural activities and in particular the activities of superintendence over a construction project and the preparation of plans and designs for the construction of an edifice that is in fact constructed can be included as "any construction, installation, agricultural or engineering activity" pursuant to subparagraph 122.3(1)(b)(i)(B) of the Income Tax Act.

Your request for our opinion on whether architects who perform certain activities can be considered to be performing activities consistent with section 122.3(1)(b)(i)(B) of the Income Tax Act indicates that you may have some misconceptions concerning the application of the section.  Accordingly, we wish to point out that among the conditions that must be satisfied in order for an individual to be eligible for the deduction from tax otherwise payable under section 122.3(1)(b)(i)(B) are the following:

(1)     The individual must be employed by a person who is a specified employer.  Accordingly, an individual who is not an employee, e.g. a self employed architect, is not eligible for the deduction form tax under this section.

(2)     The individual must have performed all or substantially all the duties of his employment in one or more countries other than Canada in connection with a contract under which the specified employer carried on business in such other country or countries with respect to any construction, installation, agricultural or engineering activity.  Accordingly, the individual need not himself directly undertake one of the specified kinds of activities, rather his or her employer must be undertaking such activities.  Furthermore, the employer must have a contract under which it undertook such activities such that the undertaking of such activities by the employer constitutes the carrying on of such type of business by the employer in the other country or countries.  The individual must have performed his duties of employment in the other country or countries in connection with the employer's contract.  Thus, for example, individuals whose duties of employment are administrative office functions, e.g. bookkeeping, for their employer will be eligible if they are "in connection with" the performance by the employer of a contract of the kind described above.

We also refer you to Interpretation Bulletin IT-497R2 dated June 29, 1990 which sets forth the Department's views generally in respect of section 122.3.

We also wish to bring to your attention that the opinions expressed herein are not advance income tax rulings and, in accordance with paragraph 24 of Information Circular 70-6R, are not considered binding on the Department.

Yours truly,

for DirectorReorganizations and Non-Resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch