10 August 2000 Ruling 2000-0030793 - UK PPS Pension Plan

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: Will amounts paid from a UK Personal Pension Scheme which has only received employee contributions constitute superannuation or pension benefits for purposes of the Act?

Position: No.

Reasons: The UK PPS will not qualify as a superannuation or pension plan for purposes of the Act where there are only employee contributions.

XXXXXXXXXX 						2000-003079
M. P. Sarazin
Attention: XXXXXXXXXX 

August 10, 2000

Dear Sirs:

Re: United Kingdom Personal Pension Scheme ("PPS")

This is in response to your letters of April 4 and May 19, 2000, wherein you requested confirmation that amounts received by a Canadian resident from a PPS that has never received any contributions from an employer of the particular person would not constitute income from a superannuation or pension plan for purposes of the Income Tax Act (the "Act").

Comments

The determination of whether an amount would constitute a superannuation or pension plan payment is a question of fact. We note that amounts received out of a foreign plan will only fall within the provisions of paragraph 56(1)(a) of the Act if the foreign plan is a superannuation or pension plan. In our opinion, this will only occur where contributions have been made to the foreign plan by or on behalf of an employer or former employer of an employee in consideration for services rendered by the employee or, in some cases, where amounts have been contributed by a government. To explain, the courts have generally found that a plan will not be a superannuation or pension plan where only the beneficiary of the plan has made contributions. The courts have in particular, frequently cited the 4th definition of pension as set out in the Shorter Oxford English Dictionary as support for their decisions. This definition provides that a pension is:

"4. An annuity or other periodical payment made, esp. by a government, a company, or an employer of labour, in consideration of past services."

Because of these decisions we have accepted the general position that amounts received out of a foreign plan where only employee contributions have been made, are not superannuation or pension benefits. They are, therefore, not included in income in accordance with subparagraph 56(1)(a)(i) of the Act.

You will note that these comments confirm the views previously expressed to you in our letters dated November 13, 1997 (file #972448) and June 11, 1997 (file #961142).

We trust that the above comments will be of assistance.

Yours truly,

Patricia Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate