| 19(1) | 5-9165 |
| D.S. Delorey | |
| (613) 957-3495 |
December 22, 1989
This is in reply to your letter of November 27, 1989 concerning paragraph 212(1)(j.1) of the Income Tax Act (the "Act").
You describe a situation in which a non-resident is paid a retiring allowance after 19 years of service with his employer and, because throughout 12 of those years the non-resident was neither resident nor employed in Canada, 12/19 of the retiring allowance would not be taxable by virtue of the exception in subparagraph 212(1)(j.1)(i) of the Act. With respect thereto, you request our views on the number of years that would be eligible under clause 60(j.1)(ii)(A) of the Act for the purpose of determining the portion of the remaining 7/19 that could be excluded by virtue of the exception in subparagraph 212(1)(j.1)(ii) of the Act.
Where a non-resident's employer validly transfers a portion of a retiring allowance to the non-resident's registered retirement savings plan, the exception in subparagraph 212(1)(j.1)(ii) provides for an exclusion of up to the maximum that would be deductible under paragraph 60(j.1) had the non-resident been resident in Canada throughout the year. It is our view that for the purpose of computing this maximum, the number of years that would be eligible under clause 60(j.1)(ii)(A) in the above-described situation would be 19, notwithstanding that 12/19 of the retiring allowance would not be taxable by virtue of subparagraph 212(1)(j.1)(i).
The above comments reflect only expressions of opinion which, as stated in paragraph 24 of Information Circular 70-6R, are not binding on the Department. We trust however that they will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate