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: payments toXXXXXXXXXX
Position: amounts are taxable
Reasons: payments for inadequate notice
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Herb Dhaliwal, Minister of National Revenue, has asked me to reply to your letters of January 4, and February 3, 1999, regarding the taxation of payments to former employees of XXXXXXXXXX.
XXXXXXXXXX. Their complaint was based on a failure to provide written notice of termination or failure to provide pay in lieu of such notice, as required by XXXXXXXXXX. You have asked the Department to consider such amounts not subject to tax.
Although I appreciate the hardships endured by the XXXXXXXXXX, the Department cannot accede to such a request. The Income Tax Act requires such amounts to be included in income and it does not give the Minister the discretion to waive this requirement.
However, the recent federal budget, tabled in the House of Commons on February 16, 1999, has introduced a provision which may provide some relief. Currently, amounts, such as those from XXXXXXXXXX, are required to be included in income in the year of receipt even though they relate to a preceding year. The new proposal will compare the taxes payable under the current system to the taxes plus interest payable if the amounts were included in income in the year to which they relate, and taxpayers will be given the more favourable treatment. This provision will be applicable to payments in excess of $3,000 that were received after 1994.
An individual requesting this provision be applied should send a written request to the tax centre where his return is filed. For payments received in 1998, the request should be sent separate from his or her return and should provide the following information:
- the year the payment was received;
- a complete description of the payment and the surrounding circumstances;
- the total amount of the payment and a breakdown between principal and interest; and
- the year to which the principal relates.
I trust my comments are of assistance.
Yours sincerely,
Bill McCloskey
Assistant Deputy Minister
Policy and Legislation Branch
D. Duff
March 8, 1999
957-2058
990182
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