7 June 2001 Internal T.I. 2001-0069430 - Specified Employer

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Whether the Federal Government of Canada is a specified employer for purposes of subsection 122.3(2) of the Act

Position: Yes

Reasons: Definition of "person" in subsection 248(1) of the Act.

Memo To File
Simon Leung
Income Tax Rulings
Date: June 7, 2001
File # 2001-006943

Subject: Robert Bissell v. The Queen (TCC; docket: 2000-1477(IT)I)

OETC - Specified Employer

This case is about an employee of the Federal Government, Industry Canada, Pacific Region (the "Employer"). In accordance with an "Interchange Canada Agreement" between the Employer and Spectrocan Engineering Inc. ("S.E.I.") he was assigned to S.E.I. for a one year period to work in Indonesia as S.E.I.'s management operations advisor. Under the terms of the Agreement he continued to be an employee of Industry Canada and S.E.I. reimbursed the Employer for his salary plus any applicable benefits.

In determining that Mr. Bissell was not eligible for the overseas employment tax credit, the Judge based his decision on the finding that Industry Canada was not a "specified employer" within the meaning of subsection 122.3(2) of the Act.

We do not concur with that finding of the Judge. "Specified employer" defined in subsection 122.3(2) of the Act includes a person resident in Canada. It is our view that the Federal Government of Canada is a person resident in Canada. In addition to the broad meaning of "person" in subsection 248(1) of the Act, this view is consistent with our interpretation of the income tax treaties that Canada has with other countries regarding the residence of a person under Article 4 of most of these treaties. Therefore, in spite of the reason used in the judgment of this case (note: this is an informal procedure case with limited precedence value), we will maintain our position that the government of a country (including federal, provincial or local authority) is a person resident in that country for the purposes of both the Act and the income tax treaties that Canada has with other countries.

We should note, however, that where the employer is the government, the issue that generally arises is whether the duties of the individual's employment outside Canada were "in connection with a contract with which the specified employer carried on business outside Canada".