I-3, r. 1 - Regulation respecting the Taxation Act

Section 47.16r1 Disposition versions

2012-09-01

47.16R1. A plan or arrangement referred to in paragraph l of section 47.16 of the Act is an arrangement in writing

(a)  between an employer and an employee that is established after 27 July 1986 where

i.  it is reasonable to conclude, having regard to the circumstances, including the terms and conditions of the arrangement and any agreement relating thereto, that the arrangement is not established to provide benefits to the employee on or after retirement but is established for the main purpose of permitting the employee to fund, through salary or wage deferrals, a leave of absence from the employee’s employment of not less than 3 consecutive months if the leave is to be taken by the employee for the purpose of permitting the full-time attendance of the employee at a designated educational institution within the meaning assigned by subsection 1 of section 118.6 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), or of 6 consecutive months in any other case, that is to commence immediately after a period, in this section referred to as the “deferral period”, not exceeding 6 years after the date on which the deferrals for the leave of absence commence,

ii.  the part of the salary or wages deferred by the employee under the arrangement or any other similar arrangement for the services rendered by the employee to the employer in a taxation year does not exceed one-third of the amount of the salary or wages that the employee would, but for the arrangements, have reasonably expected to receive in the year in respect of the services,

iii.  the arrangement provides that throughout the period of the leave of absence referred to in subparagraph i the employee will not receive any salary or wages from the employer, or from any other person or partnership with whom the employer does not deal at arm’s length, other than

(1)  the amount by which the employee’s salary or wages under the arrangement was deferred or is to be reduced, or amounts that are based on a percentage of the salary or wage scale of employees of the employer, which percentage is fixed in respect of the employee for the deferral period and the leave of absence referred to in subparagraph i, or

(2)  the reasonable fringe benefits that the employer usually pays to or on behalf of employees,

iv.  the arrangement provides

(1)  that the amounts deferred in respect of the employee under the arrangement are held by or for the account of a trust governed by a plan or arrangement that is an employee benefit plan and that the amount that may reasonably be considered to be the income of the trust for a taxation year that has been earned by it for the benefit of the employee is to be paid in the year to the employee, or

(2)  that the amounts deferred in respect of the employee under the arrangement are held by or for the account of any person other than a trust referred to in subparagraph 1 and that the amount in respect of interest or other additional amounts that may reasonably be considered to have accrued to or for the benefit of the employee to the end of a taxation year is to be paid in the year to the employee;

v.  the arrangement provides that the employee is to return to the employee’s regular employment with the employer or an employer that participates in the same or a similar arrangement after the leave of absence referred to in subparagraph i for a period that is not less than the period of leave of absence, and

vi.  subject to subparagraph iv, the arrangement provides that all amounts held for the employee’s benefit under the arrangement are to be paid to the employee not later than the end of the first taxation year that begins after the end of the deferral period;

(b)  between an employer and an employee that is established before 28 July 1986 where it is reasonable to conclude, having regard to the circumstances, including the terms and conditions of the arrangement and any agreement relating thereto, that the arrangement is not established to provide benefits to the employee on or after retirement but is established for the main purpose of permitting the employee to fund, through salary or wage deferrals, a leave of absence from the employee’s employment and under which the deferrals for the leave of absence commenced before 1 January 1987;

(c)  that is established for the purpose of deferring the salary or wages of a professional referee or linesman for the referee’s or linesman’s services as such with the National Hockey League if, in the case of a professional referee or linesman resident in Canada, the trust or any other person having custody and control of any funds, investments or other property under the arrangement is resident in Canada; or

(d)  subject to section 47.16R2, between a corporation and an employee of the corporation or a corporation related thereto under which the employee, or, after the employee’s death, a dependant, the legal representative or a relation of the employee, may or is to receive an amount that may reasonably be attributed to duties of an office or employment performed by the employee on behalf of the corporation or a corporation related thereto where

i.  all amounts that may be received under the arrangement will be received after the time of the employee’s death or retirement from, or loss of, the office or employment, but not later than the end of the first calendar year commencing thereafter, and

ii.  the total of all amounts each of which may be received under the arrangement depends on the fair market value of shares of the capital stock of the corporation or a corporation related thereto at a time within the period that commences 1 year before the time of the employee’s death or retirement from, or loss of, the office or employment and that ends at the time the amount is received.

s. 47.16R1; O.C. 1471-91 s. 4; O.C. 35-96, s. 86; O.C. 67-96, s. 5; O.C. 1707-97, s. 98; O.C. 1466-98, s. 126; O.C. 1463-2001, s. 24; O.C. 134-2009, s. 1.