additional 10% tax on withdrawal from 401(k) plan, as income tax
123
Principal Issues: 1) Can the taxpayer transfer an amount currently held in a 401(k) plan to an RRSP under paragraph 60(j) of the Act? 2) Can the taxpayer claim the US withholding taxes under subsection 126(1)? 3) Is the 10% additional US tax payable on the early withdrawal from a 401(k) plan considered a non-business-income tax as defined by subsection 126(7) of the Act?
Position: 1) Yes. 2) Yes 3) Yes
Reasons: 1) The payment meets the conditions of paragraph 60(j). 2) The amount withheld under Section 1441 of the Code is an income or profits tax. 3) The 10% additional US tax imposed under Section 72 of the Code is an income or profits tax.
unlike s. 216 returns, the assessment of s. 162(7) penalties is subject to the same normal reassessment period as for the Part I return
164
Principal Issues: Whether the normal reassessment period for a T1135 return, required to be filed according to subsection 233.3(3), begins at the same date as the return of income under Part I.
Position: Yes.
Reasons: Penalties assessed for the failure to file a T1135 are assessed under Part I and are subject to the normal reassessment period and other limitations in section 152.
