December 7, 1988
Head Office Financial Industries Division M. Shea-DesRosiers (613) 957-8953
SUBJECT: Estate of XXXX
This is in reply to your Memorandum of October 18, 1988 concerning the above- mentioned estate.
You describe the following situation:
The taxpayer died XXXX at XXXX years of age. He was an employee with XXXX and contributed to an employer-employee Pension Plan.
XXXX informed the solicitor for the estate that a past service contribution could be made to the pension which would result in an increased lump sum payment from the plan as follows:
Value of lump sum benefit based on contributions XXXX prior to death
Value of lump sum benefit based on an additional XXXX payment of XXXX
The estate paid the XXXX and subsequently received the XXXX and reported this amount in the T3 return.
You enquire as to whether the XXXX is an allowable deduction.
It is our opinion that the amount of XXXX is not deductible by the estate since this amount is not considered, a speaking, as property income under section 9 of the Income Tax Act. It is an amount to be included under subsection 56(1) of the Income Tax Act. There are no sections in the Income Tax Act to allow a deduction of said amount in the circumstances described in your memorandum.
We trust the above comments will be of assistance to you.
Wayne Douglas for Director Financial Industries Division Rulings Directorate