Revenue Canada Taxation Head Office
XXXX
G. Ozols (613) 957-2127
MAY 24 1989
Dear Sirs:
Re: Retiring Allowance Received After Vow of Poverty
This is in reply to your letter of April 10, 1989 requesting our opinion on the application of paragraph 60(j.1) of the Income Tax Act (the "Act") where a former member of a religious order who took a vow of poverty will be receiving retirement benefits.
As explained in Information Circular 70-6R, it is not the Department's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax-ruling. Taxpayers seriously contemplating a proposed transaction are best advised to seek a formal ruling, submitting copies of any relevant documents as well as a complete statement of facts and issues. We are not therefore in a position to give you a definite answer to your question. However, we can offer you the following general comments which may be of assistance to you.
The taxpayer concerned was a member of a religious order who took a vow of poverty. He has since left the religious order and the order wishes to provide him with some form of retirement benefit. The intention is to apply paragraph 60(j.1) of the Act and transfer the retirement benefits, tax free, into the taxpayer's Registered Retirement Savings Plan ( the "RRSP"). You wish to know if this is possible.
In order to effect a tax-free rollover (within the limits allowed by paragraph 60(j.1) of the Act) of the retirement benefit to the RRSP, the retirement benefit must be a retiring allowance as that term is defined in subsection 248(1) of the Act. We have enclosed a copy of the 1988 Pension and RRSP Tax Guide, which explains how a retiring allowance may be rolled over into an RRSP. A retiring allowance means, among other things, an amount received upon or after retirement of a taxpayer from an office or employment in recognition of his long service. Under the definition of employment in subsection 248(1) of the Act, which states in part that employment means "the position of an individual in the service of some other person", it is possible that a member of a religious order could be considered to be in the employment of the order so that the retirement benefit would be a retiring allowance under the Act. However, it is a question of fact to be decided on the merits of each case after reviewing all of the relevant details, whether an amount received upon retirement is a retiring allowance and if so, what amount may be rolled over under paragraph 60(j.1) of the Act.
Accordingly, we are unable to say with any certainty whether the retirement benefit meets the definition of a retiring allowance so that paragraph 60(j.1) of the Act would be available to the taxpayer. Should you wish to proceed with an advance income tax ruling, please refer to the enclosed copy of Information Circular 70-6R for details on requesting a ruling. Please note that the current deposit is $325 and the current hourly fee is $65.
We trust the above is of assistance to you.
Yours truly,
for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch