| 5-910507 |
Dear Sirs:
Re: Our letter of April 4, 1991
Further to the above-noted letter and our telephone conversation of April 15, 1991, this is to advise that Article 29 of the Canada-France Tax Convention (1975) contains a provision which may be applicable to the situation on which you asked us to comment.
Paragraph 5 of that Article applies if a person, who resides or is temporarily present in Canada, made contributions "in a year" to a pension plan that is recognized "for tax purposes" in France where the contributions are in respect of services rendered "in that year" by the person. The person must have been making contributions to the plan before he came to Canada. Contributions on behalf of that person (for example, by an employer) are also covered. Such contributions made in a period which does not exceed 60 months are treated as having been made to a pension plan that is recognized for tax purposes in Canada, but will not be treated as having been made to an employee benefit plan in Canada. The competent authority in Canada must agree that the France pension plan corresponds to a pension plan recognized for Canadian Tax purposes. Questions for the competent authority should be addressed to.
Provincial and International Relations Revenue Canada, Taxation Ottawa, Ontario KlA OL8 (613) 957-2070
If these conditions are satisfied, therefore, employer contributions are deductible throughout the 60 month period, as are employee contributions to be same extent as if they were made to a "pension plan". Paragraph 6(1)(a) would apply to exclude from the employee's income the value of any benefit from his employer's contributions to or under the pension plan.
After the 60 months period, contributions by both employer and employee will be considered contributions to an RCA. The comments in the last full paragraph of our letter of April 4th still pertains.
The opinion herein is not binding on the Department but we trust this additional information will assist you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate
cc: David R. Senécal Provincial and International Relations Division