Principal Issues: Whether split income from a related business received by an individual is precluded from being derived from an "excluded business" if a leave of absence is taken in a particular taxation year. Specifically, whether such individual can be (or deemed to be) actively engaged in the related business on a regular, continuous and substantial basis even though the individual has taken a leave of absence during the particular taxation year in question.
Position: Question of fact. The period of time during which an individual is on leave will not, in and of itself, preclude the individual from meeting the requirements of an "excluded business". In certain circumstances, the CRA will disregard the temporary absence in determining if the individual in question was (or deemed to be) actively engaged in the business on a regular, continuous and substantial basis. Specifically, the CRA is willing to take this approach in cases where an individual who is unable to work (due to illness, injury, the birth/adoption of a child) takes a leave from work, provided that the leave in question is reasonable and in line with leave taken in an arm's length situation for similar reasons, and where the individual can reasonably be expected and has demonstrated an intent to return to work on the expiration of the leave period.
Reasons: See below.
