12 April 1995 Internal T.I. 9509366 - INTER. OF "IN RESPECT OF SERVICES RENDERED BY T/P"

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:

Meaning of "in respect of services rendered by the taxpayer" in paragraph 8(1)(m.2) of the Act.

Position TAKEN:

The expression "in respect of services rendered by the taxpayer" should be broadly interpreted and should include contributions made in a year subsequent to the year in which the services have been rendered.

Reasons FOR POSITION TAKEN:

Opinions 5-923124 and 5-923697.

			April 12, 1995

HEADQUARTERS HEADQUARTERS
Assessment of Returns Directorate A. St-Amour
(613) 957-8953
Attention: Ed Williams
T1 Programs Division
7-950936

Paragraph 8(1)(m.2)
Contributions by former deputy heads

This is in response to your memorandum dated April 5, 1995 requesting our interpretation of the expression "in respect of services rendered by the taxpayer" in paragraph 8(1)(m.2) of the Income Tax Act ("the Act").

Pursuant to the former section 14 of the Public Service Superannuation Act ("PSSA"), former deputy heads were permitted to elect to continue membership in the plan after leaving the public service. This section of the PSSA was repealed and replaced by subsections 11(1)(d) and 11(1)(e) of the Special Retirement Arrangements Act ("SRAA") which was enacted on December 15, 1994.

Since the deputy heads are no longer employed by the Federal government, you are concerned that they may not satisfy the requirement in the preamble of paragraph 8(1)(m.2) of the Act which states that contributions be made "in respect of services rendered by the taxpayer".

It is our view that the phrase "in respect of" is of the widest scope. In Nowegijick v The Queen, 83 DTC 5041, the Supreme Court of Canada discussed the meaning of the words "in respect of". At page 5045, Mr. Justice Dickson states that:

"The words "in respect of" are, in my opinion, words of the widest possible scope. They import such meanings as "in relation to", "with reference to" or "in connection with". The phrase "in respect of" is probably the widest of any expression intended to convey some connection between two related subject matters."

We are of the view that pension benefits provided by a retirement compensation arrangement ("RCA") to an employee may be in respect of services rendered by the employee prior to the establishment of the RCA and payments of employee's contributions may be made in a year subsequent to the year in which the services have been rendered.

Subsection 207.6(6) deems a prescribed plan or arrangement to be an RCA and sets out a number of new rules that apply to plans and arrangements that are prescribed for the purposes of the provisions of the Act relating to RCA's. It is the intention of the Department of Finance to add section 6802.1 to the Income Tax Regulations ("the Regulations") to prescribe specific plans and arrangements for this purpose which will include those described in the SRAA.

If the plan or arrangement meets the definition of a prescribed plan, contributions made by an employee will be deductible for tax purposes in the year they are made pursuant to the preamble of 8(1)(m.2) of the Act.

We trust the above comments are satisfactory. If you have any questions do not hesitate to contact us.

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch