4 March 1992 Administrative Letter 9203326 F - T/P Works Outside Canada Less Than 6 Months (7984-1)

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.

               March 4, 1992

     International Taxation Office     Rulings Directorate

     360 Laurier West     K.B. Harding

     Room 200C     957-2111

     Attention: Doug Wark

          920332

      Overseas Employment Tax Credit (OETC)

Enclosed is a copy of a letter from 24(1) of Calgary. In view of the fact that while the letter refers to hypothetical situations, the information provided appears to be of sufficient detailed that it appears to relate more to specific situations than to hypothetical situations.  Accordingly, we are of the view that you should respond to such a letter.

A description and our proposed responses to the particular situations outlined in their letter is as follows.

Situation A

Facts

24(1)

24(1)  

Response

It is our view that in order for and individual to deduct the OETC that individual must have been employed by a specified employer for a period of six consecutive months outside Canada, commencing, in the year or a previous year, on the first day he performed his duties of employment outside Canada and ending with the last day he ceased to perform his duties of employment outside Canada. The Technical Notes issued by the Department of Finance in 1983, when the the Overseas deduction was replaced by the OETC, stated "(t)he new credit is available to individuals resident in Canada working abroad for six consecutive months or longer for a specified employer in connection with a resource, construction  installation , agricultural or engineering project".  Accordingly, in the above situations Mr. A, Mr. B, Mr.C and Mr. D will not qualify for the OETC since such individuals could not have spent more than  173 days outside Canada even though they were employed by a specified employer for a period of six consecutive months or more. 

Situation B

Facts

24(1)

Response

In order to qualify for the OETC, Mr. E had to be employed by a specified employer and performed all or substantially all the duties of employment in a country other than Canada in connection with a contract under which the specified employer carried on business in such country.  The facts indicate that Mr. E is employed by a specified employer, namely Canco.  However, since Canco does not have a contract under which it carried on business in a country outside Canada, Mr. E will not qualify to claim the OETC.

We are in agreement that USCo would qualify as a specified employer pursuant to subparagraph 122.3(2)(a)(iii) of the Act.  However, it is always a question of fact whether Mr. E is an employee of USCo or of Canco, but since the facts presented clearly indicated that Canco was Mr. E's employer, Mr. E. would not be eligible to claim the OETC.

Situation C

24(1)

Response

The period from March 1 to December 31 is a qualifying period for Mr. F since he was employed outside Canada for a period of time exceeding more than 6 consecutive months.  Since Mr. F is employed by a specified employer  he would be eligible to claim the OETC provided the employer carried out the drilling activities itself outside Canada in connection with the two contracts and he performed all or substantially all the duties of his employment outside Canada.  The fact that Mr. F's employment is performed under two separate contracts will not affect his right to claim the OETC.

for DirectorReorganizations and Foreign DivisionRulings DirectorateLegislative and Intergovernmental  Affairs Branch