23 August 2010 External T.I. 2010-0373051E5 - Canada 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.

Principal Issues: Is a retired taxpayer eligible for the Canada Employment Tax Credit if he receives post-retirement benefits that are taxed as employment income?

Position: Where the post-retirement benefits are taxed as income from employment, the income qualifies for the credit.

Reasons: Interpretation of the relevant provisions of the Act.

XXXXXXXXXX
                                                      2010-037305
                                                      T. Posadovsky, CMA
                                                      (613) 952-8283
August 23, 2010

Dear XXXXXXXXXX :

Re: Canada Employment Tax Credit.

We are writing in response to your letter of June 30, 2010, wherein you asked for an interpretation on the application of the Canada employment tax credit (the "CETC"). Specifically, you wish to know whether your post-retirement benefits that are taxed as employment income qualify for the CETC.

The particular circumstances outlined in your letter relate to a factual situation involving a specific taxpayer. Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. We are, however, prepared to offer the following general comments, which may be of assistance.

Our Comments

An individual who reports employment income on his or her T1 return may claim a non-refundable tax credit pursuant to subsection 118(10) of the Income Tax Act (the "Act"). First effective in 2006, the CETC was intended to provide relief to employees who may incur various work related expenses. The credit is calculated as the lesser of an indexed amount ($1,050 for 2010) or the total of all amounts, each of which is an amount included in computing the individual's income for the taxation year from an office or employment (not including any deductions under section 8 of the Act) multiplied by the appropriate percentage for the year (15% in 2010).

In your specific circumstance, you received taxable post-retirement benefits from your former employer in the form of paid medical and group term life insurance premiums.

Whether a particular post-retirement benefit provided to a former employee is taxable as income from employment is a question of fact. Where such post-retirement benefits are required to be included into an individual's income from employment under section 6 of the Act, that income qualifies for the CETC under subsection 118(10) of the Act.

We trust that our comments have been of assistance.

Yours truly,

Randy Hewlett
Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch