| 19(1) | 5-9197 |
| A.B. Adler | |
| (613) 957-8962 | |
| December 19, 1989 |
Dear Sirs:
This is in reply to your letter dated December 6, 1989 in which you requested our views with respect to the income tax treatment of certain payments to be made by an employer under an employer sponsored contributory savings plan ("Plan").
24(1)
As indicated in paragraph 23 of our Information Circular No. 70-6R we do not provide written opinions on proposed transactions. However, we are prepared to provide you with the following general comments.
It is always a question of fact whether an individual has retired or suffered the loss of an office or employment. Further, in the case of the Plan it is a question of fact whether the payments in question can be characterized as retiring allowances for income tax purposes. In general we would expect payments in respect of e.g., accrued amounts made under a contractual obligation and after the termination of employment (which payments were not taxable under the salary deferral arrangements rules) to be includable in the former employee's income by reason of subsection 6(3) of the Act when received.
We would also refer you to relevant commentary in Interpretation Bulletin IT-337R2 and, in particular, in paragraphs 6 and 7 thereof.
Should you decide to pursue this matter further we suggest that you request a ruling, or contact the relevant officials at your local district taxation office.
We trust that our comments will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate