Income Tax Regulations (C.R.C., c. 945)

Regulations are current to 2015-06-09 and last amended on 2015-05-29. Previous Versions

 For the purposes of paragraph (l) of the definition “salary deferral arrangement” in subsection 248(1) of the Act, a prescribed plan or arrangement is an arrangement in writing

  • (a) between an employer and an employee that is established on or after July 28, 1986 where

    • (i) it is reasonable to conclude, having regard to all 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

      • (A) where the leave of absence 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 118.6(1) of the Act), three consecutive months, or

      • (B) in any other case, six consecutive months

      that is to commence immediately after a period (in this section referred to as the “deferral period”) not exceeding six years after the date on which the deferrals for the leave of absence commence,

    • (ii) the amount of salary or wages deferred by the employee under all such arrangements for the services rendered by the employee to the employer in a taxation year does not exceed 33 1/3 per cent of the amount of the salary or wages that the employee would, but for the arrangements, reasonably be expected to have received in the year in respect of the services,

    • (iii) the arrangement provides that throughout the period of the leave of absence the employee does 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

      • (A) 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, and

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

    • (iv) the arrangement provides that the amounts deferred in respect of the employee under the arrangement

      • (A) are held by or for the account of a trust governed by a plan or arrangement that is an employee benefit plan within the meaning of the definition thereof in subsection 248(1) of the Act, and provides 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 shall be paid in the year to the employee, or

      • (B) are held by or for the account of any person other than a trust referred to in clause (A), and provides 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 shall be paid in the year to the employee,

    • (v) the arrangement provides that the employee is to return to his regular employment with the employer or an employer that participates in the same or a similar arrangement after the leave of absence for a period that is not less than the period of the leave of absence, and

    • (vi) subject to subparagraph (iv), the arrangement provides that all amounts held for the employee’s benefit under the arrangement shall be paid to the employee out of or under the arrangement no later than the end of the first taxation year that commences after the end of the deferral period;

  • (b) between an employer and an employee that is established before July 28, 1986 where it is reasonable to conclude, having regard to all the circumstances, including the terms and conditions of the arrangement and any agreement relating thereto, that the arrangement is not established to provide benefits 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 employment and under which the deferrals in respect of the leave of absence commenced before 1987;

  • (c) that is established for the purpose of deferring the salary or wages of a professional on-ice official for his services as such with the National Hockey League if, in the case of an official resident in Canada, the trust or other person who has custody and control of any funds, investments or other property under the arrangement is resident in Canada; or

  • (d) 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 or relation of the employee or the legal representative of the employee) may or shall receive an amount that may reasonably be attributable 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 shall be received after the time of the employee’s death or retirement from, or loss of, the office or employment and no later than the end of the first calendar year commencing thereafter, and

    • (ii) the aggregate 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 one year before the time of the employee’s death or retirement from, or loss of, the office or employment and ends at the time the amount is received,

    unless, by reason of the arrangement or a series of transactions that includes the arrangement, the employee or a person with whom the employee does not deal at arm’s length is entitled, either immediately or in the future, either absolutely or contingently, to receive or obtain any amount or benefit granted or to be granted for the purpose of reducing the impact, in whole or in part, of any reduction in the fair market value of the shares of the corporation or a corporation related thereto.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/88-128, s. 1;
  • SOR/91-153, s. 1;
  • SOR/94-686, ss. 78(F), 79(F).