23 March 1990 Ruling 90M03333 F - Deduction from Tax for Employees of International Organizations

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.

Attention:  Mr. Clayton Davies

SUBSECTION 126(3) - DEDUCTION FROM PART I TAX FOR EMPLOYEES OF DEFINED ORGANIZATIONS

In your memorandum you indicated that you had a case in which a Canadian resident was working for the 24(1) was claiming a credit under section 126(3) although no levy had been paid to the 24(1)

Your concern is that if the 24(1) a United Nations Agency or brought into relationship with the United Nations in accordance with Article 63 of the Charter of the United Nations that the individual will be entitled to a credit with no relationship to any amounts paid.

Section 126(3) provides for a credit of two groups of international organizations, the first being United Nations organizations and those brought into relationship by virtue of Article 63. The second group is other organizations. In all cases the organization must also qualify under section 3 of the Privileges and Immunities (International Organizations) Act.

The first part of section 126(3) gives a credit without reference to the levy. Prior to amendment, the section had tied everything to the levy so that there was no possibility of anything excessive occurring. The levy always exceeded any Canadian tax and the problem was usually how the excess would be or could be credited.

The change in the section was to meet the demands of 24(1) cause of the many problems 24(1) finance was not prepared to go this far, but did opt for the present, not realizing that any other problems existed.

24(1)

In the circumstances it would not seem that the taxpayer is entitled to a deduction if no levy was paid.

You indicate that the taxpayer is a resident of Canada. If the person is a deemed resident under section 250(1) then only federal tax would be involved. If the person is a continuing resident of Canada, he would be a resident of a province and provincial tax would be exigible.

C. SavageA/DirectorProvincial and International Relations Division

EEC/jb no6-435File CopySequence fileAuthor's copy Access to Info(2) Reading file