31 January 1996 External T.I. 9531305 - 4093-J2 TAXATION OF JAPANESE PENSION

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.

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Attention: XXXXXXXXXX

January 31, 1996

Dear Sirs:

Re: Canada - Japan Income Tax Convention

This is in response to your letter dated November 24, 1995 wherein you request our interpretation in reference to the application of the Canada - Japan Income Tax Convention (the "Convention") to a lump sum pension received by an individual resident in Canada from a corporation resident in Japan. In the hypothetical situation you are interested in, the pension relates primarily to employment exercised in Japan while a resident of Japan.

An individual resident in Canada is generally subject to tax under the Income Tax Act on his worldwide income. While it is not entirely clear whether Article 15 or Article 20 of the Convention would govern Japan's right to tax this type of payment, this is a question that should be addressed by Japanese taxation authorities. In our view, Canada's right to tax a Canadian resident is unaffected by either provision of the Convention notwithstanding that a portion of the pension income received by such resident, relates to employment exercised by him in Japan while a resident of that country.

We hope that the above is of assistance to you.

Yours truly,

for Director
Reorganizations and Foreign Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch