periodic payment

In finding that a lump-sum payment to cover support-payment arrears could be considered as an amount payable on a periodic basis, even though it was less than the amount initially anticipated, the Directorate stated:

[G]enerally, a lump sum paid in a taxation year is regarded as qualifying as a periodic payment where it can be identified as being the payment of amounts payable periodically that were due after the date of the order or agreement and had fallen into arrears.

In order to maximize Canadian foreign tax credits for the U.S. tax withheld, a Canadian resident withdraws the amounts in the individual’s IRA through partial surrenders occurring over a number of years. Do these qualify as not being made as “part of a series of periodic payments”?

CRA responded:

Section 60.01 applies to a lump sum that is a one-time payment, which does not include each instalment that is made as part of a series of periodic payments to settle a particular lump sum.

"In general, a periodic payment is one of a series of at least three equivalent payments made under an arrangement that specifies the interval between payments. It is our opinion that this definition would also be applicable to paragraph 60.01(a) of the Act. We are also of the view that the payment of a lump sum in instalments would not generally constitute a series of periodic payments."

The taxpayer has two distinct Individual Retirement Accounts, each with a value of $200,000, and transfers one to the taxpayer's RRSP in 2013 and the other in a subsequent year.

In noting that such transfers would not be considered to occur as "part of a series of periodic payments," CRA stated (Tax Interpretations translation):