3 April 1995 External T.I. 9433195 - OVERSEAS EMPLOYMENT TAX CREDIT

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.

		943319
XXXXXXXXXX 	David R. Senécal

Attention: XXXXXXXXXX

April 3, 1995

Dear Sirs:

Re: Overseas Employment Tax Credit (OETC)

This is in reply to your letter of August 17, 1994, wherein you request our views with respect to the application of section 122.3 of the Income Tax Act (the "Act"). We apologize for the delay in responding.

More specifically, your query relates to the applicability of section 122.3 of the Act in a situation where a Canadian resident has been working two or three years on an overseas project for a specified employer and is otherwise eligible to claim the overseas employment credit. Because of the hectic work schedule, the employee may have accumulated a large amount of paid leave (three to twelve months) from overtime (including time in lieu of statutory holidays) and unused vacation. The employee is then granted permission to take this leave in one continuous period, all, or a large part, of which may be spent in Canada. While on leave, the employee will not perform any employment duties and, at the end of the leave period, will continue to work overseas for the same employer.

It is always a question of fact as to whether or not, a particular taxpayer would be eligible to claim the overseas employment credit in a given situation. With this in mind, we feel that the situation you have presented us with is a very unusual one and, as such, does not lend itself to our providing you with any comments or views of a general nature, particularly, given the very few facts at our disposal. We would, however, call into question an employee's ability to use the extensive amount of paid leave in the manner outlined in your letter where, apparently, the time pressures faced by the employer and/or the employee's importance were such as to require the employee to work so much overtime.

Yours truly,

for Director
Reorganizations and Foreign Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch