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 Sirs:
Re: Teacher-Funded Hold Back Leave Plan
We are writing in reply to your letter of September 18, 1991, in which you ask whether it would contravene the Income Tax Act (the "Act") to permit an employee to defer 50% of his or her salary under a plan such as the one named above. Under your proposed plan, income taxes would be withheld on 100% of the salary.
If taxes are withheld on 100% of the gross annual salary, there is nothing in the Act that would prohibit the holding of 50% of the salary in trust or by someone on behalf of the employee. If the amount held is invested, interest income earned on that amount in a taxation year must be reported on a T5 slip for the employee in the year.
The Act provides for the deferral of tax on salary which is held in trust or by a third party under the provisions of a deferred salary leave plan. Further details concerning this type of plan are contained in the enclosed ATR-39. As you will note, the amount of salary that may be deferred under such a plan is limited to a maximum of 33 1/3% of the annual gross salary. Interest income earned on deferred amounts are considered employment income and must be paid each year and reported on the employee's T4 slip.
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1991
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1991
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