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: Could an employee take a leave of absence before retiring to reduce pension reduction and receive a retiring allowance during the leave period?
Position: No
Reasons: A person is generally employed while on leave and the agreement between the employer and employee states the exact retirement date.
XXXXXXXXXX 983296
M. P. Sarazin
Attention: XXXXXXXXXX
December 17, 1998
Dear Sirs:
Re: Employee on Leave of Absence and Retiring Allowance
This is in reply to your letter dated December 11, 1998, which was forwarded to us by our Trust Accounts Division, wherein you requested a ruling on whether a particular employee would be considered retired for purposes of the retiring allowance definition in subsection 248(1) of the Income Tax Act (the “Act”).
In your letter you have outlined what appears to be an actual fact situation related to a past transaction. The review of such transactions falls within the responsibility of Tax Services Offices and it is the practice of this Department not to comment on such transactions without a review of all of the relevant facts. However, we can provide you with the following general comments which we hope will be of assistance.
Whether a person has retired or suffered a loss of office or employment is a question of fact that can only be determined after a review of all of the facts.
Where an agreement between the employer and employee is very clear in respect of the employee’s retirement date, the Department will generally consider the employee to have retired on the agreed date. The fact that the employee may take an approved leave of absence would not change the agreed retirement date for purposes of the Act. In this regard we would refer you to William Serafini v. The Minister of National Revenue (89 DTC 653) where the court ruled that a retiring allowance could not be paid before the agreed retirement date. In addition, we refer you to paragraph 4 of Interpretation Bulletin IT-337R3 wherein it states “... an individual who has been given a leave of absence for educational purposes is still an employee.”.
We trust the above 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
c.c.: Paul Remillard
Manager, Trust Accounts Division
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