It was unclear whether benefits received by the taxpayer (now a Canadian resident) from a “provident fund” (the “PF”), that had been established for the taxpayer by a non-resident employer should be included in income under s. 6(1)(g) as benefits from an employee benefit plan (“EBP”) or under s. 56(1)(a)(i) as benefits from a (foreign) pension plan. CRA noted:
- “A foreign pension plan would generally fall within the EBP definition, but a foreign EBP does not necessarily fall within the meaning of a pension plan.”
- If the PF is an EBP, the amounts received therefrom would be taxable under s. 6(1)(g), subject to exceptions including that in s. 6(1)(g)(iii) regarding pension benefits received out of the plan that are attributable to services rendered by a person while a non-resident in Canada – as to which there would be fully taxability under s. 56(1)(a)(i) regardless of non-deductibility of contributions to the plan or a foreign tax exemption for the benefits.
- Where the amount received out of the PF is a lump sum amount that is taxable under s. 56(1)(a)(i), a deduction may be permitted under s. 60(j) for a transfer to an RRSP or registered pension plan.