17 June 1996 Ministerial Letter 9619588 - SEASONAL WORKERS REC'G VACATION IN LIEU OF A LUMP SUM

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 Act has any concerns about paid vacation in lieu of lump sum upon termination of employment of seasonal workers

Position:

the timing and amount of remuneration to be taxed should not vary accd'g to whether it is paid as vacation pay or as a lump sum

Reasons:

Under section 30 of the Ontario Employment Standards Act (OESA), employees who work less than 12 months for one employer are entitled to be paid an amount equal to 4 per cent of their wages. Where the terms and conditions of employment in a collective agreement provide a greater right or benefit respecting holidays than the OESA, the terms and conditions of the collective agreement will apply. Since section 30 of the OESA only becomes operative at the termination of employment, the substitution of paid vacation for a lump sum would not be a deferred amount even if the arrangement was an SDA.

ADM'S OFFICE (3) ADM961522
RETURN TO 15TH FLOOR, ALBION TOWER

June 17, 1996

XXXXXXXXXX

Dear XXXXXXXXXX:

I am replying to your letter of May 23, 1996, concerning a proposed arrangement to provide seasonal workers represented by your union with paid vacation before their work term ends rather than with a lump sum payment at the end.

We are not aware of any rule in the Income Tax Act or Regulations which would cause adverse income tax consequences in so far as the proposed arrangement is concerned.

Employment income, unless it is part of a salary deferral arrangement, is generally taxed in the year it is received. From your description, we note that, in both situations, all of the income will be received in the same calendar year, whether or not it is paid during a period of vacation or as a lump sum. As a result, the manner in which remuneration is paid should not affect the timing, or the amount of remuneration to be included in the employees' income for income tax purposes.

Should you wish to discuss your specific situation further, I suggest that you contact your local tax services office. XXXXXXXXXX

I trust these comments will be of assistance to you.

						Yours sincerely,
		Denis Lefebrve
		Assistant Deputy Minister
		Policy and Legislation Branch
A. Humenuk
957-2134
June 6, 1996