Words and Phrases - "Crown agent"
21 June 2004 External T.I. 2004-0074851E5 F - Allocation de retraite
Whether severance that became payable to the taxpayer was a retiring allowance turned on whether the municipality who terminated her was related to the municipality who rehired her. CRA stated:
Subsection 251(2) defines the term "related persons" as, inter alia, two corporations controlled by the same person or group of persons. Therefore, it must be determined whether the City and Municipality are controlled by the provincial government or are agents of the government or Crown of Quebec.
[A] particular entity will be an agent of the Crown if the law creating the entity expressly makes it an agent of the Crown or the entity is an agent of the Crown at common law. In this regard, the courts have established the function and control test. For example, one must consider the nature of the functions performed by the municipality, i.e., the extent of state and governmental functions, and one must assess the nature and degree of control exercised by the government over that entity. In this regard, the word "control" does not mean ownership of 50% or more of the voting shares of the entity but rather control of operations which is comparable to the type of control exercised by the board of directors and shareholders of a commercial enterprise. …
According to our analysis … Municipality and City were not agents of the Quebec government, nor were they entities controlled by that government. Consequently, at the time of the employee's loss of employment, the City and Municipality were not related persons.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Retiring Allowance | severance was a retiring allowance even though the employee was hired by another municipality that had agreed to take over the municipal functions of her first employer | 366 |
| Tax Topics - Income Tax Act - Section 60 - Paragraph 60(j.1) - Subparagraph 60(j.1)(ii) - Clause 60(j.1)(ii)(C) | unrelated person who has assumed a severance payment obligation is treated as paying the severance on behalf of the “employer” who terminated | 180 |