8 August 2002 External T.I. 2002-0143015 - PRESCRIBED INTERNATIONAL ORGANIZATION

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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues:

Whether XXXXXXXXXX is a prescribed international organization.

Position:

No.

Reasons:

Paragraph 8900(a) of the Regulations requires that the agency in question be a "specialized agency" brought into a relationship with the United Nations under Article 63 of the Charter of the United Nations. While XXXXXXXXXX is indirectly associated with XXXXXXXXXX (a specialized agency under the Charter), it is apparent from Article 63 that XXXXXXXXXX itself must be brought into relationship with the United Nations by an agreement that has been approved by the General Assembly

XXXXXXXXXX 								2002-014301

August 8, 2002

Re: Income From Employment With A Prescribed International Organization

Dear XXXXXXXXXX:

We are writing in response to your letter dated May 10, 2002, wherein you requested our opinion with respect the eligibility of one of your clients for a deduction under paragraph 110(1)(f) of the Income Tax Act (the Act) for employment income earned from a prescribed international organization.

Our understanding of the facts is as follows:

Facts

XXXXXXXXXX.

Our Comments

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 IC 70-6R5, Advance Income Tax Rulings. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office (TSO). However, we offer the following comments.

In computing the taxable income of a taxpayer for a taxation year, subparagraph 110(1)(f)(iii) of the Act provides for a deduction for income earned from employment with a "prescribed international organization". Section 8900 of the Income Tax Regulations (the Regulations) defines prescribed international organizations for the purposes of paragraph 110(1)(f) of the Act. By virtue of paragraph 8900(a) of the Regulations, "the United Nations, and any specialized agency that is brought into relationship with the United Nations in accordance with Article 63 of the Charter of the United Nations" is a prescribed international organization.

The relevant articles in the Charter which deal with specialized agencies are as follows:

Article 57

1. The various specialized agencies, established by intergovernmental agreement and having wide international responsibilities, as defined in their basic instruments, in economic, social, cultural, educational, health, and related fields, shall be brought into relationship with the United Nations in accordance with the provisions of Article 63.

2. Such agencies thus brought into relationship with the United Nations are hereinafter referred to as specialized agencies.

Article 63

1. The Economic and Social Council may enter into agreements with any of the agencies referred to in Article 57, defining the terms on which the agency concerned shall be brought into relationship with the United Nations. Such agreements shall be subject to approval by the General Assembly.

2. It may co-ordinate the activities of the specialized agencies through consultation with and recommendations to such agencies and through recommendations to the General Assembly and to the Members of the United Nations.

It is apparent from these articles in the Charter that XXXXXXXXXX itself must be the agency brought into relationship with the UN to be considered a "specialized agency". Article 63 requires that the Economic and Social Council enter into agreement with the agency, and that this agreement is approved by the General Assembly. While XXXXXXXXXX is a specialized agency, it is our view that XXXXXXXXXX would not be considered a specialized agency under Article 63 because of its association with XXXXXXXXXX or any other specialized agency of the UN. We have reviewed information available on the UN website, but there is no indication that XXXXXXXXXX is a specialized agency. The available information indicates that the specialized agencies for UN programmes specific to Africa are:

• FAO,
• International Atomic Energy Agency (IAEA),
• International Civil Aviation Organization (ICAO),
• International Fund for Agricultural Development (IFAD),
• International Labour Office (ILO),
• International Marine Organization (IMO),
• International Telecommunication Union (ITU),
• United Nations Educational, Scientific and Cultural Organization (UNESCO),
• United Nations Industrial Development Organization (UNIDO),
• Universal Postal Union (UPU),
• World Intellectual Property Organization (WIPO),
• World Health Organization (WHO), and
• World Meteorological Organization (WMO)

In our view, since XXXXXXXXXX is not considered a specialized agency for the purposes of paragraph 8900(a) of the Regulations, your client would not be eligible for the deduction under paragraph 110(1)(f) of the Act.

We trust our comments are of assistance.

Yours truly,

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch