21 September 1994 Internal T.I. 9423857 - EARNED INCOME, RRSP, UNITED NATIONS

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.

Principal Issues:Does earned income include income from UN employment?

Position TAKEN:Question of fact and not enough facts provided.

Reasons FOR POSITION:Routine application of law

		September 21, 1994

Ottawa District Office Head Office
Client Assistance Rulings Directorate
(613) 957-8953
Attention: V. Bernard Ladouceur
7-942385

Definition of Earned Income

This is in reply to your memorandum of September 13, 1994, in which you asked if income from employment with the United Nations qualified as "earned Income" as defined in subsection 146(1) of the Income Tax Act (the "Act").

In your memo you referred to the "statement between subparagraph (ii) and paragraph (d)" and questioned how that would apply. Please note that the phrase referred to does not fall between subparagraph (ii) and paragraph (d) but is part of paragraph (c). Accordingly, paragraph (c) provides that:

earned income includes a person's income for a period throughout which the person is not resident in Canada:

from employment performed in Canada, computed without reference to paragraphs 8(1)(c), (m) and (m.2); or

from any business carried on in Canada

except to the extent that income is exempt from tax in Canada under an international treaty or convention.

Similar wording is also used in paragraph (d) of the definition.

In general, a resident of Canada is taxable in Canada on his worldwide employment income including income earned from employment with the United Nations. However, income from employment with the United Nations may be exempt as discussed in paragraph 3 of IT 397R, if the person is resident in Canada but is not a citizen of Canada, or under the Canada U.S Tax Convention.

Employment income earned in the United States by a resident of Canada may also be exempt from Canadian taxation through the application of Article XV of Canada - U.S 1980 Tax Convention. However, such amounts are not excluded from inclusion in income under subsection 81(1) of the Act and must be reported as employment income. Instead, an offsetting deduction is allowed in accordance with paragraph 110(1)(f) of the Act.

If a person is resident in Canada throughout a period and the income in question is not exempt from taxation in Canada, it must be included in "earned income" for the period in accordance with subparagraph (a)(i) of the definition.

If a person is not a resident of Canada but is employed in Canada or is deemed to be employed in Canada by virtue of subsection 115(2), the person's income may be included in earned income to the extent provided by either paragraph (c) or (d) of the definition of earned income.

In respect of a person employed with the United Nations, you will have to determine where they were resident and employed before you can determine which, if any, of the above noted provisions apply. If after determining this information you still have any concerns, please feel free to contact us.

for Director
Financial Industries Division
Rulings Directorate
Policy and Legislation Branch