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.
Dear Sir:
Re: Incentive Performance Plan
This is in reply to your letter of January 16, 1990 requesting our technical interpretation on the above-mentioned subject. We apologize for the delay but the subject matter was under study and we were therefore not in a position to give an answer to your query.
In the situation you describe, the taxpayer proposes XXX
Our Comments
An employee electing not to receive payment at maturity of a unit creates a right to receive an amount after the year as contemplated by the salary deferral arrangement ("SDA") ??? in Subsection 248(1) of the Income Tax Act. This right cannot be considered to relate to future services but relates solely to services rendered in the year or a preceding year. Since the decision to request payment or delay payment is not to be made for some time, it is not possible at this time to determine if the main purpose for the creation of the XXX will meet the purpose test in the SDA rules. Therefore, it is our opinion that although the plan will not be considered an SDA before maturity, it may or may not be considered an SDA on maturity. Such consideration will be a question of fact to be determined on or after maturity of a unit.
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© Her Majesty the Queen in Right of Canada, 1990
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© Sa Majesté la Reine du Chef du Canada, 1990
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