| October 25, 1989 | |
| To: Victoria District Office | From: Financial Industries |
| Division | |
| Attention: Mr. B.K. Currie | W.C. Harding |
| Chief, Source Deductions | (613) 957-3499 |
| File No. 7-4141 |
Subject: Section 40 of the ITAR 24(1)
This is in reply to your memorandum of July 18, 1989 on the above-noted topic.
As we indicated in our reply to you of July 13, the amount of the benefit payable to the taxpayer on the death of the former employee on which an election under ITAR subsection 40(1) may be made is restricted by virtue of ITAR subsection 40(7), after 1973, to the amount of the benefit independent of the amount of any periodic payments made after that date except to the extent they have application to the calculation of the accrued benefit.
In a situation where a deceased taxpayer had contributed to a pension both before 1972 and after 1971 and on the basis of those contributions was guaranteed an annual pension for a specified period of time, it is our view that it would not be unreasonable to consider the ITAR 40(7) amount as being the lesser of the amount received by the spouse and the amount that the taxpayer would have received had he withdrawn from the plan on January 1, 1972.
We trust our comments are satisfactory.
for DirectorFinancial Industries DivisionRulings Directorate