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: Would vacation pay and retroactive sick leave constitute a bonus for purposes of 100(3.2) of the Regulations?
Position: No
Reasons: Each term is specific and constitutes wages and salary
XXXXXXXXXX 981168
M. P. Sarazin
Attention: XXXXXXXXXX
June 3, 1998
Dear Sirs:
Re: Meaning of “Bonus” in Proposed Subsection 100(3.2) of the Regulations
This is in reply to your letter dated May 1, 1998, wherein you requested our views as to whether a lump sum payment for banked vacation pay and sick credits would qualify as a bonus for the purposes of proposed subsection 100(3.2) of the Income Tax Regulations (the “Regulations”).
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 “bonus”. Therefore, the expression will be given the normal meaning that is given to the term when it is used throughout the Income Tax Act (the “Act”) and Regulations.
In our view, vacation pay, sick credits and bonuses are mutually exclusive terms describing a form of employment benefit that is included in an employee’s salaries and wages for purposes of the Act and Regulations. Consequently, vacation pay and sick credits will not be considered a bonus for the purposes of proposed subsection 100(3.2) of the Regulations.
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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