| 19(1) | 5-901774 |
| T. Murphy | |
| (613) 957-2747 |
October 16, 1990
Dear Sir:
Re: Pension income amount Line 314 of the 1989 General Tax Guide
We are writing in response to your letter dated July 23, 1990 wherein you requested clarification of the pension income amount calculation contained in Charts 2 and 3 under line 314 in the 1989 General Tax Guide (the "Guide"). You are particularly concerned about annuity payments received from a registered retirement savings plan ("RRSP") and registered retirement income fund ("RRIF") payments.
As you have noted from your reading of the Guide, there are various types of pension income. However, the types of pension income that qualify for inclusion in the pension income amount vary depending on both the age of the individual and the source of the pension income.
Charts 1 to 3 under line 314 in the Guide provide a detailed step-by-step calculation of an individual's pension income amount.
Chart 1 is applicable where an individual is age 65 or older on December 31, 1989.
Chart 2 is applicable where an individual:
(a) is age 60 to 64 on December 31, 1989; or
(b) is under age 60 on December 31, 1989 and received a disability pension or survivor's pension under the Canada or Quebec Pension Plan.
Chart 3 is applicable where an individual:
(a) is under age 60 on December 31, 1989; and
(b) did not receive a disability pension or survivor's pension under the Canada or Quebec Pension Plan; and
(c) did not transfer any pension income to his RRSP or registered pension plan other than lump-sum payments from deferred profit sharing plans.
The first line of all three charts is:
"Total pension payments received from a pension plan or fund as a life annuity (pension benefits do not include OAS or CPP/QPP benefits)".
In addition to the exclusion for OAS or CPP/QPP benefits, pension payments received from a pension plan or fund as a life annuity do not include:
(a) annuity payments from an RRSP;
(b) RRIF payments;
(c) the taxable part of general annuities (shown on line 115 of the 1989 income tax return);
(d) annuity payments from an income-averaging annuity contract; and
(e) annuity payments from a deferred profit sharing plan.
For an individual to whom Chart 1 applies, items (a) to (e) above qualify for inclusion in the pension income amount [see items (4) to (8) of Chart 1]. For an individual to whom either Chart 2 or Chart 3 applies, items (a) to (e) above qualify for inclusion in the pension a in come amount only if they were received because of the death of the individual's spouse.
Thus, for example, annuity payments from a RRSP or a RRIF received by a retired individual, married or single, age 62 on December 31, 1989 do not qualify for inclusion in the pension income amount. On the other hand, annuity payments from a RRSP or a RRIF received by a retired individual because of the death of his or her spouse would qualify for inclusion in the pension income amount.
We hope our letter clarifies the pension income amount calculation contained in the Guide. Further information on the pension income amount calculation is contained in the enclosed copies of the pamphlet "When You Retire" and Interpretation Bulletin IT-517.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate