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: Are certain employers including a joint venture and participants in the joint venture considered related for the purposes of paragraph 60(j.1) of the Act?
Position: Question of fact.
Reasons: Where employers are not related under subparagraphs 60(j.1)(iv) and (v) of the Act, we would have to look at the relationship between the employers to make the determination, including the joint venture agreement.
XXXXXXXXXX 2000-000462
M. P. Sarazin
Attention: XXXXXXXXXX
March 14, 2000
Dear Sirs:
Re: Retiring Allowance and Related Employers
This is in response to your letter dated January 25, 2000, wherein you requested confirmation that an individual's two former employers would be related to the individual's current employer for purposes of paragraph 60(j.1) of the Income Tax Act (the "Act").
An individual's current employer is a joint venture of several organizations which include two of the individual's former employers. The individual's employment with the joint venture has been terminated and the individual has received an amount in respect of his or her loss of employment. You have asked whether the two former employers would be considered related to the individual's latest employer for purposes of paragraph 60(j.1) of the Act.
In your letter you have outlined what appears to be an actual fact situation related to completed transactions. We must advise you that the review of such transactions falls within the responsibility of tax services offices. However, we can provide you with the following general comments.
The Canada Customs and Revenue Agency (the "Agency") provides its general views regarding retiring allowances in Interpretation Bulletin IT-337R3 (available at your local tax services office or on the internet at www.ccra-adrc.gc.ca/formspubs/menu-e.html). Paragraph 13(b) of IT-337R3 deals specifically with the determination of whether employers are related. Where an employer has not acquired the business of another employer or where the employer's pension plan does not provide the employee with benefits in respect of the employee's service with the previous employer, the employers will only be related if they are related under section 251 of the Act.
In Interpretation Bulletin IT-419R, the Agency provides general comments regarding the determination of whether persons are related to each other for purposes of the Act. We note that the determination of whether specific participants in the joint venture are related can only be determined after a review of all of the particular facts including the joint venture agreement and its mode of operation. A joint venture is not a person for purposes of the Act and, where a joint venture pays a retiring allowance, it is generally the joint venturers collectively who are considered to be paying the retiring allowance. Whether the former employers are considered to be paying the retiring allowance or a portion thereof will require a review of the joint venture agreement.
We trust these comments will be of assistance.
Yours truly,
P. Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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