R. Nanner (613) 957-8960
December 16, 1986
Dear Sirs:
This is in reply to your letter dated October 17, 1986 wherein you asked us to confirm that the lump sum payments under the New Program can be transferred to a registered retirement savings plan ("RRSP") as a "retiring allowance", as the term is defined in subsection 248(1) of the Income Tax Act (the "Act").
Your letter contemplates a proposed transaction. As pointed out in the Information Circular 70-6R, we do not offer opinions on proposed transactions. We are willing to render a ruling if so requested in accordance with the above-mentioned circular. We are, however, prepared to offer the following general comments.
Payment of unused sick leave credit upon or after retirement qualifies as a "retiring allowance". Cash payments for accumulated sick leave credits under the New Program, in our opinion, would not qualify as a retiring allowance as these payments are not to be made upon or after the employee's retirement.
We hope our comments are of assistance to you.
Yours truly,
for Director Financial Industries Division Rulings Directorate Legislative and Intergovernmental Affairs Branch