21 February 1994 Internal T.I. 9319057 - INDIANS

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

		February 21, 1994

	Hamilton District Office	Head Office
	Client Assistance	Rulings Directorate
A. M. Brake
	Attention: E. Marshall	(613) 957-2133
		931905

Loss from Office or Employment

This is in reply to your memorandum dated June 23, 1993, regarding deductions in respect of registered pension contributions and union dues creating non-capital losses where the Indian Act has application in conjunction with paragraph 81(1)(a) of the Income Tax Act (the "Act") to exempt employment income from that taxpayer's particular office or employment.

Paragraph 4(1)(a) of the Act provides that, for purposes of the Act, a taxpayer's income or loss for a taxation year from an office or employment is the loss therefrom computed in accordance with the Act.

A taxpayer's income from a particular office or employment would include all amounts required to be brought into income by virtue of sections 5, 6 and 7 of the Act minus any section 8 deductions that are wholly applicable to that particular office or employment. In the case at hand, the taxpayer's salary or wages would be brought into income under subsection 5(1) of the Act and amounts would be deducted in respect of contributions to a registered pension plan and union dues as provided by paragraphs 8(1)(m) and (i) respectively. It would be this net amount or a percentage thereof, if positive, that would be exempt under paragraph 81(1)(a) of the Act. If negative, it would be a loss from a particular office or employment computed in accordance with subsection 5(2) of the Act which states, "A taxpayer's loss for a taxation year from an office or employment is the amount of his loss, if any, for the taxation year from that source computed by applying the provisions of this Act respecting computation of income from that source mutatis mutandis". In other words, if the section 8 deductions wholly applicable to that particular office or employment exceeded the total of the amounts required to be included in income by virtue of sections 5, 6 and 7 of the Act from that particular office or employment, a taxpayer would have a loss from that particular source. Should there be such a loss and it would be an unusual situation, the question to be answered is whether we would recognize this loss. While paragraph 81(1)(a) would exempt a positive amount from income, in our view, there is no provision to preclude a loss, computed in accordance with subsection 5(2) of the Act, from being included under paragraph 3(d) of the Act.

In summary, this taxpayer does not have a loss from an office or employment as set out in subsection 5(2) because the earnings (gross salary) exceeds the deductions, provided for under section 8 of the Act, in respect of registered pension contributions and union dues.

R. Albert
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch

c.c. Rick Owen

Client Assistance Directorate