Revenue Canada Taxation
Head Office 5-7359 J.D. Jones (613) 957-2104
JAN 19 1989
Re: Withholding Tax
This is in reply to your letter of December 19, 1988 wherein you requested a refund of withholding tax paid by XXXX on your behalf in circumstances summarized below.
XXXX
It is your view that the amount received from XXXX out of the Incentive Performance Plan is a payment which falls within the meaning of "pension" under Article XVIII of the Canada-U.S. Income Tax Convention (1980). Accordingly, it is your view that the amount of tax withheld in respect of the sum of XXXX should have been limited to 15% XXXX and as such you are requesting a refund in the amount of XXXX together with interest at the appropriate rate.
We regret that we are unable to agree with your view. Based on the information available, it iso, our view that the amount you received from XXXX out of the Incentive Performance Plan is a payment out of or under an "employee benefit plan" as defined in subsection 248(1)of the Income Tax Act (the "Act") and represents income from an office or employment taxable under Part I of the Act pursuant to paragraph 61)(g) of the Act.
We have enclosed the Department's Interpretation Bulletin, IT-502 which provides more detailed information in this regard and would direct your attention to paragraphs 7 and 14.
In order to determine whether or not any of the withholding tax may be refunded, you will be required to file an income tax return pursuant to section 115 of the Act.
If you are still of the view that the payment falls within the meaning of "pension" under Article XVIII of the Canada-U.S. Income tax Convention (1980), we would be pleased to reconsider our opinion upon presentation of further submissions and any relevant documentation to support your view.
We regret our reply could not be favorable.
Yours truly,
ORIGINAL SIGNED BY ORIGINAL SIGNÉ PAR
P. D. FUOCO
for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch