| 5-920130 | |
| 24(1) | P. Spice |
| 19(1) | (613) 957-8953 |
February 5, 1992
Dear Sirs:
Re: Retiring Allowances
We are writing in reply to your letter of December 28, 1991, in which you ask whether certain payments will qualify as "retiring allowances" as defined in subsection 248(1) of the Income Tax Act (the "Act").
Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R2. Where the particular transactions are completed, the enquiry should be addressed to the relevant District Taxation Office. The following comments are, therefore, of a general nature only, and are not binding on the Department.
We take the view that in a case where pension benefits continue to accrue or normal employee benefits continue to be enjoyed by an individual, it is unlikely that employment has ceased even though the individual is not required to report to work.
Amounts received during this period of leave from employment would not be considered a retiring allowance within the meaning of subsection 248(1) of the Act, nor would they qualify for a tax-free transfer to the recipient's RRSP under paragraph 60(j.1) of the Act.
If, however, the employer has entered into an approved downsizing program in accordance with section 8505 of the Income Tax Act Regulations, the awarding of additional lifetime retirement benefits under the pension plan will not, in itself, be regarded as an indication of continued employment.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate