1 June 1993 External T.I. 9309815 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.

XXXXXXXXXX

Attention:  XXXXXXXXXX

Dear Sirs:

RE:  Deferred Salary Leave Plan ATR-39

This is in reply to your letter of March 26, 1993, in which you ask whether the above noted publication is a guide or prescriptive.

As you suggest, this publication merely describes one deferred salary leave plan which meets the conditions of paragraph 6801(a) of the Regulations under the Income Tax Act. Plans which contain different conditions, definitions and terms may also satisfy the requirements of the legislation. The definition of "eligible employee" contained in ATR-39 is not a prerequisite for a plan to be considered a deferred salary leave plan. We did not receive the attachment of your model agreement so cannot comment on the specific definition in your plan.

Please note that the following clauses in ATR-39 contain terms which should be included in a plan if recognition as a prescribed plan under paragraph 6801(a) of the Regulations is desired:

Definition of "Leave of Absence, last sentence. Alternatively, the leave may be for three consecutive months if the purpose for the leave is to attend full-time at a "designated educational institution" within the meaning of subsection 118.6(1) of the Income Tax Act).

Clause 2.2 - reference to maximum percentage.

Clause 2.3

Clause 3.1 - reference to maximum six year deferral period.

Clause 3.2 - reference to deadline by which deferred amounts are to be paid out to an employee.

Clauses 3.4 and 3.5 - last sentences, if plan permits such delays or postponements.

Clause 3.6 - reference to requirement that leave period commence immediately after deferral period.

Clause 5.2 - if plan permits such suspension.

Clause 6.1

Clause 7.3

The plan should also contain a clause to the effect that the employee will not receive any additional remuneration from the employer or persons with whom the employer does not deal at arm's length during the leave of absence other than the usual fringe benefits. This condition is noted at the top of page 6 of ATR-39 and is covered with some variations in Clause 3.3.

We trust the foregoing information is of assistance.

Yours truly,

for DirectorFinancial Industries DivisionRulings Directorate