M.D. Praulins (613) 957-2123
February 17, 1987
Re: Canada - U.K. Tax Convention - Article 17 and Section 217 Election under the Income Tax Act
This is in reply to your letter of January 16, 1987, in which you requested our comments on the treatment to be accorded pension income received by a U.K. resident from Canada where a section 217 election is made under the Income Tax Act (the "Act").
Your questions will be answered in the order that you presented them to us, with regard to the assumptions provided in your letter.
Periodic payments out of a Registered Retirement Savings Plan ("RRSP") are granted relief under Article 17(1) of the Canada - U.K. Income Tax Convention (the "Convention."), but "pensions" do not include lump sum payments out of an RRSP or pension plan.
2. Taxpayers filing a return under Part I pursuant to the provisions of section 217 of the Act must include in income all amounts referred to in subparagraph 217(b)(i). However, in accordance with subparagraph 217(b)(iii) and subparagraph 110(1)(f) the monthly pension income from Canada may be deductible in arriving at the taxpayer's taxable income. It is the Department's position that the taxpayer must include in income the amount in question.
However if a deduction is claimed pursuant to paragraph 110(1)(f) of the Act and a provision in a tax treaty, the taxpayer must indicate the particular Article or rule of Protocol which is applicable.
We trust that the above information is adequate for your purposes.
Yours truly,
for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch