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Dear XXXXXXXXXX
This is in reply to your letter of October 23, 1992 addressed to the Sudbury Taxation Centre and further to our (XXXXXXXXXX/Delorey) telephone conversation on February 3, 1993.
XXXXXXXXXX
Our Comments:
As indicated above, the lump-sum payment was made out of a superannuation fund or plan. A foreign superannuation fund or plan is considered for Canadian income tax purposes to be an employee benefit plan ("EBP"). By virtue of subparagraph 6(1)(g)(iii) of the Act, an amount received out of an EBP is taxable under subparagraph 56(1)(a)(i) of the Act where the amount is attributable to services rendered while the recipient was not resident in Canada and is a superannuation or pension benefit . A "superannuation or pension benefit" is defined in subsection 248(1) of the Act to include any payment under a superannuation or pension fund or plan. Accordingly, based on the available information, it is our view that the lump-sum payment is a superannuation or pension benefit taxable under subparagraph 56(1)(a)(i) of the Act.
A deduction is available under paragraph 60(j) of the Act for the portion of a superannuation or pension benefit received out of a foreign pension plan that is contributed to a registered retirement savings plan ("RRSP"), provided that
(a) the benefit is not deducted by reason of subparagraph 110(1)(f)(i) of the Act (the lump-sum payment would not be so deducted because the Canada-U.K. Income Tax Convention does not exempt the relevant payment from Canadian tax),
(b) the benefit is not part of a series of periodic payments (the lump-sum payment is not part of such a series),
(c) the benefit is attributable to services rendered by the recipient or his spouse in a period throughout which such person was not resident in Canada (which the lump-sum payment is), and
(d) the recipient designates in his return the portion of the benefit contributed to his RRSP.
It is thus our view that a paragraph 60(j) deduction is available to you with respect to the lump-sum payment that was contributed to your RRSP in August 1992. You should include the payment in your 1992 income and claim a deduction of a similar amount, supporting the deduction by using Form T2097 or including in your return a declaration in writing that the deduction is being made under paragraph 60(j) of the Act. Form T2097 is obtainable from the Sudbury District Office or Taxation Centre.
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Part of the $XXXXXXXXXX may not, therefore, be deductible under paragraph 60(j) and you may wish to withdraw this excess from your RRSP using Form T3012 which is also obtainable from the Sudbury District Office or Taxation Centre. Alternatively, if you have RRSP deduction room for 1992, you may want to consider the amount that is not deductible under paragraph 60(j) to be a contribution deductible under subsection 146(5) of the Act. Your deduction room for the purposes of subsection 146(5) is not reduced by a deduction under paragraph 60(j).
Our comments are an expression of opinion only and are not binding on the Department as explained in paragraph 21 of Information Circular 70- 6R2. We trust, however, that they are of assistance.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate