13 January 1998 External T.I. 9733425 - 6801(D), DIRECTOR'S FEES

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:

Can Directors' committee fees be deferred under a 6801(d) plan?

Position: Yes

Reasons:

The Committee fees are treated just like any other director's fees. However, whether a plan meets 6801(d) is a question of fact.

973342
XXXXXXXXXX M.P. Sarazin

Attention: XXXXXXXXXX

January 13, 1998

Dear Sirs:

Re: Directors' Committee Fees

This is in reply to your letter of December 17, 1997, wherein you requested our views as to whether Directors' Committee fees could be treated like Directors' fees for purposes of a prescribed plan that satisfies the conditions of paragraph 6801(d) of the Income Tax Regulations.

We are of the view that paragraph 6(1)(c) of the Income Tax Act would apply to all fees paid by a corporation to a director, including fees for serving on a committee. Where a plan defers the recognition of directors fees, including committee fees, in accordance with the provisions of paragraph 6801(d) of the Regulations, we are of the view that the deferral of committee fees under the plan, in and by itself, would not generally result in the plan being disqualified from satisfying paragraph 6801(d). However, it is a question of fact as to whether a particular plan does meet the conditions of paragraph 6801(d) of the Regulations and, as such, we are not able to comment on any specific plan without all of the details relating to the plan.

While we hope our comments are of assistance to you, they do not constitute an advance income tax ruling and therefore are not binding on the Department in respect of a specific situation.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate