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: Will vacation pay and accumulated sick leave qualify as retroactive payments of subsection 100(3.2) of the Regulations?
Position: No
Reasons: Term not defined so will give it ordinary meaning
XXXXXXXXXX 980607
M. P. Sarazin
Attention:XXXXXXXXXX
June 3, 1998
Dear Sirs:
Re: Meaning of “Retroactive Payments”
This is in reply to your letter dated March 9, 1998, wherein you requested our views in respect of the meaning of the expression “retroactive payment” which is used in proposed subsection 100(3.2) of the Income Tax Regulations (the “Regulations”). In particular, you would like to know whether payments for unused sick days, payments for unused vacation days or payments for accumulated severance entitlements (hereinafter collectively referred to as “Accumulating Rights Payments”) would qualify as “retroactive payments”.
The Regulatory Impact Analysis Statement issued by the Department of Finance in respect of subsection 100(3.2) does not provide any specific meaning to the expression “retroactive payment”. Consequently, we will apply the proposed provision based on the ordinary meaning of the expression.
In our view, the fact that certain rights accumulate over a period of time would not make the payment of such rights a retroactive payment for purposes of proposed subsection 100(3.2) of the Regulations. Therefore, the Accumulating Rights Payment would not generally be considered retroactive payments.
We trust the above general comments will be of assistance to you.
Yours truly,
Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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