22 November 1995 External T.I. 9526555 - RETIRING ALLOWANCE - REHIRING

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether employee remains employee or becomes independent contractor.

Position: Question of fact.

Reasons: Routine.

XXXXXXXXXX 952655

November 22, 1995

Dear XXXXXXXXXX:

Re: Post-Retirement Relationship:
Effect on Retiring Allowance

This is in reply to your facsimile transmission of October 5, 1995, in which you ask us to confirm that our position as expressed in document 9330395 would apply in the circumstances you describe as a hypothetical fact situation.

As you state in your correspondence, the determination of whether a relationship between two parties is one of employment or of independent contract is a question of fact and such a determination can be made by the Department only after a review of all the circumstances surrounding the relationship. If an employee's employment is terminated by retirement or by elimination of the position, and an amount is paid by the employer for one of the reasons set out in the definition of "retiring allowance" in subsection 248(1) of the Income Tax Act, that amount will be considered a retiring allowance. If, however, at the time of the termination a new employment has been arranged or offered, the employee will be considered to have neither retired nor to have lost an employment and, thus, the amount will not be a "retiring allowance" within the meaning of that term as provided in the Act.

The foregoing comments are an expression of opinion only and are not binding on the Department. Further assurances concerning specific fact situations can only be given in the context of an advance income tax ruling.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch