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
Dear Sir,
We are writing in response to your letter dated September 15, 1993, to the Source Deduction Unit of the Toronto District Office. The letter has been referred to us for reply. We apologize for the delay in responding.
XXXXXXXXXX on behalf of his employer to purchase buildings, stores and businesses. You indicated that these contacts for the purchase of such assets also included provisions and stipulations which provided for the construction, renovation and installation of these properties and businesses. You conclude that your father meets all of the requirements of section 122.3 of the Income Tax Act (the "Act") and request a ruling that he qualifies for the overseas employment tax credit. You also ask if the term "prescribed activities" in clause 122.3(1)(b)(C) of the Act has been expanded to include other activities.
Our Comments:
We are unable to provide you with a firm opinion on the deductibility of the overseas employment tax credit in the situation outlined above.
Such a determination is essentially a question of fact normally dealt with by the District Offices at the time of processing an individual's claim for the said tax credit in a tax return. Nevertheless, we can provide you with the following general comments.
Although the information given in your letter is not sufficient to establish with certainty whether your father qualifies or not for overseas employment tax credit, it appears on the information provided, that the duties of employment of your father would not qualify. In order to qualify, the duties of the individual's employment have to be in connection with a contract under which the specified employer carried on business outside Canada with respect to the activities specified in section 122.3, or for the purpose of obtaining on behalf of his employer a contract to undertake any of the said activities.
This would include employment for the purpose of obtaining a contract to undertake a construction, installation or engineering activity.
Employment for the purpose of obtaining contracts for the purchase of property as seen above would generally not qualify in our view, even though a construction activity is expected to accompany the acquisition. As stated earlier however, such a determination is a question of fact normally made by the District Office following a claim in a tax return by an individual for the overseas employment tax credit.
The term "prescribed activities" in clause 122.3(1)(b)(C) of the Act has not been expanded to date.
Yours truly,
for DirectorReorganizations and Non-Resident DivisionRuling DirectorateLegislative and Intergovernmental Affairs Branch
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