Freitas – Tax Court of Canada finds that a s. 96(1.1) allocation of income from an accounting firm was business income rather than a retiring allowance
A retired Deloitte partner received an opinion from his firm that professional income allocated to him under ITA s. 96(1.1) was a retiring allowance and thus excluded from being subject to CPP contributions, and also relied on the CRA opinion in 9527946 that:
Income allocated pursuant to subsection 96(1.1)… for the purposes of the CPP provision is not considered to be from a business carried on by the retired partner and consequently such a partner is not required to contribute to CPP solely as result of receiving such income.
Campbell J concluded that both opinions were incorrect, finding that a s. 96(1.1) allocation of professional income was business income.
Neal Armstrong. Summary of Freitas v. The Queen, 2017 TCC 46 under s. 248(1) – retiring allowance.