| 19(1) | 5-903040 |
| W.C. Harding | |
| 957-3496 |
November 7, 1990
19(1)
This is in reply to your letter of October 23, 1990, requesting confirmation of your understanding of the amounts deductible in respect of your contributions to 24(1)
With respect to the contributions made or to be made to 24(1) the lesser of the amount paid and $3500 will be deductible from your income in 1990 pursuant to clause 8(1)(m)(ii)(B) of the Income Tax Act. However, 24(1) your deduction for such Contributions in 1991 and subsequent years pursuant to paragraph 147.2(4)(c) of the Act is limited to the least of:
i) the aggregate of such contributions made in the year or a preceding year to the extent that they were not previously deducted; and
ii) $3500 less any contributions made to any pension plan in respect of current service or service while you were not a contributor to any pension plan.
Although your deduction for past service contributions will be nil for all years after 1990 in which you make current service contributions of $3500 or more, note that paragraph 147.2(4)(c) of the Act allows a carry forward of all such contributions until such time as they become deductible to the extent provided above. In most cases, it has been our experience that such amounts will become deductible after the individual has retired.
With respect to paragraphs b and c of your letter, we confirm your understanding that any current service contributions required under the terms of both plans are fully deductible in the year paid.
We hope our reply is of assistance to you.
Yours truly,
Director GeneralRulings DirectorateLegislative and Intergovernmental Affairs Branch