11 April 1994 External T.I. 9333475 - OVERSEAS EMPLOYMENT TAX CREDIT - FLIGHT CREWS

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.

			7-933347
XXXXXXXXXX	P. Diguer

Attention: XXXXXXXXXX

April 11, 1994

Dear Sirs:

Re: Overseas Employment Tax Credit - Flight crews

This is further to your letters dated April 27, October 6 and November 15, 1993, requesting our opinion on whether certain Canadian flight crews employed by XXXXXXXXXX on rotation abroad for periods of more than six consecutive months, would be eligible to claim the overseas employment tax credit (the "OETC") pursuant to section 122.3 of the Income Tax Act (Canada) (the "Act"). In a telephone conversation on March 25, 1994 (XXXXXXXXXX/Diguer), you indicated that you wish to withdraw your request for an opinion as you do not have sufficient time to assemble the information required by us to make this determination.

As indicated in our earlier mentioned telephone conversations, we are unable, based on the limited information provided, to provide you with a firm opinion on the deductibility of the OETC in the situation outlined in your letter. Such a determination is essentially a question of fact which is normally made by the District Offices at the time of processing an individual's claim for the OETC in a tax return or in responding to an employer request for reduced tax withholdings with respect to qualifying employees. Nevertheless, we can provide you with the following general comments.

In order to qualify for the OETC under subsection 122.3(1) of the Act, an individual resident in Canada must, throughout any period of more than 6 consecutive months, have performed all or substantially all the duties of employment outside Canada in connection with a contract under which the specified employer carried on business outside Canada with respect to any construction, installation, agricultural or engineering activity, or with respect to the exploration for minerals, to mention the main ones.

XXXXXXXXXX

Without having the opportunity to review XXXXXXXXXX business contracts, it is not possible to determine with certainty whether or not the flight crew members are entitled to the OETC, although we suspect that they are not, based on the limited information available. It does not appear to us that XXXXXXXXXX the main activity, is a qualified activity.

XXXXXXXXXX

In order to qualify, all or substantially all (90%) of the duties of the flight crew members' employment would have to be in connection with contracts for qualified activities. Since these activities appear to be of secondary importance, we suspect that they (the flight crew members) would not qualify. However, more information would be required before making a final determination.

We hope that these comments will be of some assistance.

Yours truly,

for Director
Reorganizations and Foreign Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch