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.
RULINGS DIRECTORATE CORRESPONDENCE SUMMARY
PRINCIPAL ISSUES:
Whether a leave of absence of six months is permitted for deferred salary leave plans.
POSITION TAKEN:
Yes - but pointed out that teachers must be "employed" for six consecutive months notwithstanding their semester system.
REASONS FOR POSITION TAKEN:
LEGAL:
FINANCE OPINION:
JURISPRUDENCE:
RCT PUBLICATIONS:
HAA NUMBER:
7680-4-2
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: Deferred Salary Leave Plan (the "Plan")
This is in reply to your letter of December 6, 1993, in which you ask whether your Plan may be amended to allow for a leave of absence of six months. You ask if there are any implications or considerations you should be aware of if this amendment is approved.
Deferred salary leave plans must comply with the provisions of paragraph 6801(a) of the Income Tax Regulations. It is a requirement that the leave of absence be not less than six consecutive months (unless it is for the purpose of permitting the full-time attendance of the employee at a "designated educational institution"). The amendment you propose would be acceptable.
We understand that a contract of employment for a teacher may cover a twelve month period or follow a two or three semester format. If a teacher is employed, but under the employment contract, is not required to report to work for a period between semesters, the time between semesters may be included in the calculation of the minimum six months leave of absence. For example, if a teacher is employed in August or January but is not required to report to work, these months can be counted together with a contiguous five month period of employment to meet the requirement of the Income Tax Regulations.
Although these comments are not binding on the Department, we trust they are helpful.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate
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