I-3 - Taxation Act

Section 737.26 Disposition versions

2015-10-21

737.26. The amount referred to in the first paragraph of section 737.25 in respect of an individual for a taxation year in respect of a particular period throughout which the individual performed substantially all the duties of the individual’s employment outside Canada is the aggregate of

(a)  the proportion of the out-of-Canada living allowance in respect of that employment received in the year by the individual in respect of the particular period that the individual’s basic allowance in respect of that employment for the particular period is of the individual’s total out-of-Canada living allowance in respect of the individual’s employment for the particular period; and

(b)  the proportion of the aggregate of the basic income from that employment received in the year by the individual in respect of the particular period and the amount by which the out-of-Canada living allowance in respect of that employment received in the year by the individual in respect of the particular period exceeds the amount computed under paragraph a, that the number of consecutive periods of 30 full days, not exceeding 12, worked outside Canada by the individual in respect of that employment during the particular period, is of 12.

For the purposes of the first paragraph and despite the definition of “basic income” in section 737.24, no amount may be included in computing an individual’s basic income or regarded as an out-of-Canada living allowance for a taxation year in respect of the individual’s employment by an employer

(a)  if

i.  the employer carries on a business of providing services and does not employ in the business throughout the year more than five full-time employees,

ii.  the individual does not deal at arm’s length with the employer, or is a specified shareholder of the employer, or, where the employer is a partnership, does not deal at arm’s length with a member of the partnership, or is a specified shareholder of a member of the partnership, and

iii.  but for the existence of the employer, the individual would reasonably be regarded as an employee of a person or partnership that is not a specified employer; or

(b)  if at any time in that portion of the period described in the first paragraph of section 737.25 that is in the year

i.  the employer provides the services of the individual to a corporation, trust or partnership with which the employer does not deal at arm’s length, and

ii.  the fair market value of all the issued shares of the capital stock of the corporation or of all interests in the trust or partnership, as the case may be, that are held, directly or indirectly, by persons who are resident in Canada is less than 10% of the fair market value of all those shares or interests, as the case may be.

1995, c. 1, s. 69; 1998, c. 16, s. 183; 2015, c. 21, s. 262.

2006-03-01

737.26. The amount referred to in the first paragraph of section 737.25 in respect of an individual for a taxation year in respect of a particular period throughout which the individual performed substantially all the duties of the individual’s employment outside Canada is the aggregate of

(a)  the proportion of the out-of-Canada living allowance in respect of that employment received in the year by the individual in respect of the particular period that the individual’s basic allowance in respect of that employment for the particular period is of the individual’s total out-of-Canada living allowance in respect of the individual’s employment for the particular period; and

(b)  the proportion of the aggregate of the basic income from that employment received in the year by the individual in respect of the particular period and the amount by which the out-of-Canada living allowance in respect of that employment received in the year by the individual in respect of the particular period exceeds the amount computed under paragraph a, that the number of consecutive periods of 30 full days, not exceeding 12, worked outside Canada by the individual in respect of that employment during the particular period, is of 12.

For the purposes of the first paragraph and notwithstanding the definition of “basic income” in section 737.24, no amount may be included in computing an individual’s basic income or regarded as an out-of-Canada living allowance for a taxation year in respect of the individual’s employment by an employer where

(a)  the employer carries on a business of providing services and does not employ in the business throughout the year more than five full-time employees;

(b)  the individual does not deal at arm’s length with the employer, or is a specified shareholder of the employer, or, where the employer is a partnership, does not deal at arm’s length with a member of the partnership, or is a specified shareholder of a member of the partnership; and

(c)  but for the existence of the employer, the individual would reasonably be regarded as an employee of a person or partnership that is not a specified employer.

1995, c. 1, s. 69; 1998, c. 16, s. 183.