F. Francis (613)957-3496
October 18, 1988
Dear Sirs:
Re: Division of pension benefits on settlement of matrimonial property claims
This is in reply to your letter of September 16, 1988, wherein you requested our views in respect of the above-noted item.
It is our view that the amount of pension payments received by a taxpayer which represent his spouse's interest in the pension under provincial family legislation should not be included in the taxpayer's income for tax purposes.
As a consequence thereof, the amount received by the spouse, upon the taxpayer's retirement, which represents her interest in the pension will be included in the spouse's income under paragraph 56(1)(a) of the Income Tax Act (the "Act").
In our view, these payments to the spouse would not be considered "alimony" or "maintenance" for purposes of paragraphs 56(1)(b), 56(1)(c), 60(b) or 60(c) of the Act, because they would not be payments for her maintenance, but would be payments of a capital nature in satisfaction of her property rights arising from the marriage.
Therefore, any compensation received by the spouse prior to the taxpayer's retirement will neither be taxable to the spouse nor deductible by the taxpayer.
The above comments are an expression of opinion only and are not binding on the Department.
Yours truly,
Wayne Douglas
for Director Financial Industries Division Rulings Directorate