| December 5, 1989 | |
| CALGARY DISTRICT OFFICE 24 | HEAD OFFICE |
| Financial Industries Division | |
| Attention: J. Smith | Maureen Shea-DesRosierss |
| Audit Review Section | (613) 957-8953 |
| Section/Group (148-1-1) | |
| 7-4513 |
SUBJECT: Determination as to whether Annuity Payments paid under the Judges Act qualify as "earned income" under paragraph 146(1)(c) of the Income Tax Act (the "Act")
This is in reply to your memorandum of November 8, 1989 concerning the above-mentioned subject and further to our telephone conversation (Smith/Shea-DesRosiers) of November 22, 1989.
The facts as we understand them are as follows:
24(1)
The issues that the taxpayer asks to be clarified are:
24(1)
Our Comments
24(1) Subsection 50(3) of the Judges Act reads as follows:
"For the purposes of the Income Tax Act, the amounts contributed by a judge pursuant to subsection (1) or (2) shall be deemed to be contributed to or under a registered pension fund or plan."
The contributions referred to are the contributions made by the judges to the Consolidated Revenue Fund towards their future annuities.
The Judges Act provides the circumstances where a payment is made as a "death benefit" to the estate of the judge. Subsection 51(3) of the Judges Act reads as follows:
51(3) Where, on or any time after the death of a judge who died while holding office, or the death of a judge who died after ceasing to hold office but to whom no amount has been paid under subsection (1) or (2), there is no person or there is no longer any person to whom an annuity under this Act may be paid in respect of the judge, any amount by which
(a) the total contributions made by the judge under subsection 50(1) or paragraph 50(2)(a), together with interest, if any, calculated pursuant to subsection (4),
exceeds
(b) the total amount, if any, paid to or in respect of the judge as annuity payments under this Act,
shall thereupon be paid as a death benefit to the estate of the judge or, if less than one thousand dollars, as the Minister of Justice may direct. (our underlining)
Only in the above circumstances will a payment be considered to have been made as a "death benefit" within the definition thereof in subsection 248(1) of the Act. 24(1) 21(1)(b)
Under the proposed Pension Reform, paragraph 146(1)(c) of the Act is to be amended for the 1990 and subsequent taxation years to eliminate from "earned income", superannuation or pension benefits and death benefits.
21(1)(b) 24(1)
We trust the above comments will be of assistance to you.
ChiefDeferred Income Plans andTrusts SectionFinancial Industries DivisionRulings Directorate