11 August 1999 External T.I. 9912565 - DSLP - RETROACTIVE CONTRIBUTION

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: Whether Retroactive Contribution to DSLP Will be Allowed

Position: No

Reasons: No mechanism to allow it

xxxxxxxxxx 991256
S. E. Thomson
Attention: xxxxxxxxxx

August 11, 1999

Dear XXXXXXXXXX:

Re Voluntary Leave Plan (Deferred Salary Leave Plan)

This is in reply to your letter of May 4, 1999 wherein you request whether:

1. The Department will allow a one-time exception to provide employees with a retroactive contribution in accordance with subsection 248(l) against 1998 earned income, or;

2. The Department will allow a one-time exception to provide an employee's ability to contribute to the plan, in accordance with the plan contribution limits, under 1998 earned income, and deducted against 1999 earned income.

The amount of salary or wages deferred by the employee under the arrangement for services rendered in a taxation year cannot exceed 33 1/3 per cent of the amount of the salary or wages that the employee would have received in the year in respect of the services. To the extent that the deferred amount held in 1999 does not exceed 33 1/3 per cent of 1999 salary or wages, and the arrangement otherwise qualifies, the deferred amount will not be taxable in 1999.

There is no mechanism in the Income Tax Act (the "Act") which permits a payment under a DSLP in one year to be treated as if it were made under the DSLP for a prior year. In addition, there is no authority under the Act to allow for administrative relief in this case.

We trust that the above comments will provide the information that you require.

Yours truly,

P. Spice
for Director
Financial Industries Division
Income Tax Rulings and Interpretations Directorate