Revenue Canada Taxation Head Office
T.D. Peters (613) 995-0051
July 29, 1986
Dear Sirs:
RE: Retiring Allowances
This is in reply to your letter of June 19, 1986 requesting our views as to whether certain payments would be considered retiring allowances and therefore eligible for a rollover into the individual's RRSP subject to the constraints contained in subsection 60(j.l) of the Income Tax Act (the "Act").
The situation you have described is one in which a taxpayer, as part of a retirement package negotiated with his employer, were to receive two payments related to the termination, one payment approximately one year prior to actual cessation of employment and one payment on cessation of employment. Retiring allowance, as defined in subsection 248(1) of the Act, requires in part that payments be made upon or after retirement of a taxpayer from an office or employment in recognition of his long service and therefore it is our view that the proposed payment one year prior to retirement would not be a retiring allowance.
We trust these comments will be of assistance to you in this matter.
Yours truly,
for Director Financial Industries Division Rulings Directorate Legislative and Intergovernmental Affairs Branch