CRA treats a Roth 403(b) plan as an EBP but states that withdrawals out of it could qualify for the Canada-US Treaty, Art. XVIII(1) exemption

The taxpayer and her spouse, who currently reside in the United States, will immigrate to Canada upon or after retirement. They will then begin withdrawing funds from their US 403(b) plan (and the underlying Roth 403(b) account), to which the taxpayer had made after-tax contributions and (in the case of the underlying Roth 403(b) account) her spouse had made both pre-tax and after-tax contributions.

CRA stated that it “generally consider a 403(b) plan, including the Roth 403(b) account to be an EBP [employee benefit plan]”. On this basis, amounts received from the plan would be included in income under s. 6(1)(g), subject to the exclusion in s. 6(1)(g)(ii) for returns of employee contributions that have not been previously deducted.

CRA indicated that a “403(b) plan qualifies as a pension for purposes of Art. XVIII of the Treaty.” However, IRC s. 107 excludes a minister’s housing allowance from U.S. taxable income. Accordingly, distributions received from the 403(b) plan by a resident of Canada that were designated as a minister's housing allowance would not be taxable in Canada pursuant to the exclusion in Art. XVIII for amounts that would be excluded from US taxable income if received by a US resident.

Neal Armstrong. Summaries of 13 June 2023 External T.I. 2022-0952971E5 under s. 6(1)(g) and Treaties – Income Tax Conventions – Art. 18.