12 June 1989 Income Tax Severed Letter AC73875 - Overseas Employment Tax Credit

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.

Non-Resident Taxation Division       Specialty Rulings
                                          Division
                                          S. Leung
                                          957-2116
    K. Hillier
    A/Director

SUBJECT: Draft Information Circular ("Draft IC")  File 7-3875
         Overseas Employment Tax Credit -
         Information for Employers

We have reviewed the above-noted draft IC as requested. The following are our comments:

1. The Department's position regarding the requirement of "6 consecutive months" as stated in paragraph 4 of the draft Ic has been changed. Pursuant to subsection 28 of the Interpretation Act, a month means a calendar month. A portion of a month is therefore not a calendar month because a calendar month means either one of the months named in the calendar or a period starting from a day of one month to the corresponding day of the next month. As a result, it is our view that, for purposes of computing "6 consecutive months" referred to in paragraph 122.3(1) of the Income Tax Act (the "Act"), if the starting date for the 6 consecutive months is December 19, 1988, the ending date would be June 18, 1989. Our previous position is that, an employee would qualify if he was employed to June 1, 1989. Enclosed is a copy of a recent letter dealing with this subject.

2.   With respect to the requirement that the employee cannot be
     absent from the foreign country for a complete month during
     the qualifying period as stated in paragraph 4 of the draft
     IC, we are unable to find any statutory support for such a
     requirement. If such a guideline is to be maintained, we
     suggest that any period over a month be reviewed on an
     individual basis to take into consideration such factors as
     the industrial practice (i.e. offshore drilling personnel
     usually work 30 days on and 30 days    off), the nature of the
     work performed, and the remoteness of the work site from any
     established community, etc.  Of course, the requirement that
     all or substantially all of his duties of employment have to
     be performed in a country other than Canada has to be met.

3. With respect to the requirement that the employee must perform all or substantially all of the duties of this employment... in a qualified business activity as stated in paragraph 23 of the draft IC (emphasis added), we are of the view that the wordings may create some confusion in the mind of the reader. Qualified activities, as stated in paragraph 19 of the draft IC, are activities of the specified employer, not those of the employee. As long as All or substantially all of the duties performed by the employee are in connection with a contract under which the specified employer carries on a business with respect to any of the activities referred to in Clauses 122.3(1)(b)(i)(A) to (C) of the Act, the employee would qualify for the Overseas Employment Tax Credit provided that other conditions referred to in subsection 122.3(1) of the Act are met. Hence an employee would qualify even though he is a teacher or other administrative personnel providing supporting services to other employees if all the other requirements are met. The attached letter outlines our position on the topic. We have also suggested other minor editing changes to the draft IC for your consideration as noted thereon to add clarity to the subject matters at issue. The adjusted draft IC is herewith enclosed.

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