26 September 1990 Income Tax Severed Letter AC59412 - Incentive Performance Plan

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.

24(1)                            5-9412
                                 M. Shea-Desrosiers
                                 (613) 957-8953

19(1)

September 26, 1990

Dear Sir:

Re: Incentive Performance Plan

This is in reply to your letter of January 16, 1990 requesting our technical interpretation on the above-mentioned subject. We apologize for the delay but the subject matter was under study and we were therefore not in a position to give an answer to your query. In the situation you describe, the taxpayer proposes 24(1)

Our Comments

An employee electing not to receive payment at maturity of a plan creates a right to receive an amount after the year as contemplated by the salary deferral arrangement ("SDA") definition in subsection 248(1) of the Income Tax Act. This right cannot be considered to relate to future services but relates solely to services rendered in the year or preceding year. Since the decision to request payment or delay payment is not to be made for some time it is not possible at this time to comment on the------- for the creation of the. 24(1) will meet the purpose-----in the SDA rules. Therefore, it is our opinion that although the plan will not be considered an SDA before maturity, it may or may not be considered an SDA on maturity. Such consideration will be a question of fact to be determined on or after maturity of a unit.

Yours truly,

for Director Financial Industries Division Rulings Directorate