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 a payment in respect of unused vacation leave entitlements be treated as a retiring allowance?
Position: No.
Reasons: IT 337R3 paragraph 5
XXXXXXXXXX 991007
W. C. Harding
Attention: XXXXXXXXXX
May 25, 1999
Dear Sirs:
Re: Payout of Unused Vacation Leave on Retirement
This is in reply to your facsimile of April 15, 1999, in which you requested an advance income tax ruling with respect to the treatment of a payment to be made in respect of unused vacation leave entitlements.
Written confirmation of the tax implications inherent in particular transactions are given by this Directorate when the transactions are outlined in an advance income tax ruling request which is submitted in the manner set out in Information Circular 70-6R3 a copy of which is enclosed. Since your submission does not satisfy these requirements we cannot provide a ruling at this time. However, we can advise that the Department considers that a payment in respect of accumulated vacation leave should be treated as ordinary remuneration which must be included in an employee's income in the year of receipt pursuant to subsection 5(1) or 6(3) of the Income Tax Act. This position is set out in paragraph 5 of the Department’s Interpretation Bulletin IT-337R3 a copy of which is enclosed.
We trust this information 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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