| 19(1) | File No. 5-7949 |
| Bill Guglich | |
| (613) 957-2102 |
June 8, 1989
19(1)
This is in reply to your letters of April 17 and May 16, 1989, concerning the Indian Remission Order and the withholding tax requirements respecting pension plan payments received by Indians.
The Indian Remission Order currently covers the 1983 to 1987 taxation years and provides for remission of income tax payable in respect of periodic pension payments received by Indians in respect of employment income earned on a reserve. This Remission Order applies in all of Canada, whether the Indian is living on or off the reserve.
On April 17, 1989, the Honourable Michael Wilson, Minister of Finance, announced his intention to extend the Indian Remission Order to the 1988 and 1989 taxation years. A copy of the Department of Finance release is enclosed for your information.
We are not in a position to comment on the Pension Trust Funds documentation you submitted as the situation apparently concerns a proposed transaction involving and identified insurer and a specific Pension Plan and accordingly would most appropriately be considered through the mechanism of an advance income tax ruling as discussed in Information Circular 70-6R and the Special Release thereto (copies attached.) A submission requesting an advance income tax ruling should include the relevant trust and other documentation to enable us to deal with the specific case.
As regards withholding tax, whether or not the payments are subject to tax the payer would be required to withhold tax pursuant to paragraph 153(1)(b) of the Income Tax Act and section 101 and 200 of the Income Tax Regulations. The payer could, however, contact the staff at the local District Taxation Office who may issue a waiver with respect to the withholding requirements in appropriate circumstances.
With reference to your question ion item 6, we would suggest you discuss the matter with your legal advisors.
We trust this will be of assistance to you.
Yours truly,
for Director Small Business and General DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch