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: A special German foundation was formed by German legislation recently and the German government funded the foundation. The purpose of the foundation was to make financial compensation available to holocaust survivors. The main issue is whether such financial compensation received by a Canadian taxpayer is exempt from tax in Canada.
Position: Yes such compensation is exempt from tax in Canada
Reasons: Such compensation payments fall under paragraph 81(1)(g) of the Act and are thus exempt from income tax in Canada. Also, no income tax is payable to the Federal Republic of Germany on such compensation payments made to or on behalf of holocaust survivors.
2000-005149
XXXXXXXXXX G. Middleton
(613) 957-2122
Attention: XXXXXXXXXX
October 31, 2000
Dear Sirs:
Re: Technical Interpretation for Paragraph 81(1)(g)
This is in reply to your letter of October 12, 2000 and further to the recent telephone conversations between Mr. Major and XXXXXXXXXX in which you requested an interpretation as to whether certain payments made by a German foundation to eligible Holocaust survivors are exempt from tax in Canada under paragraph 81(1)(g) of the Income Tax Act (the "Act").
Our understanding of the facts is as follows.
1. The German legislature passed a law creating a new foundation. This law is entitled the "Law on the Creation of a Foundation" with the name "Remembrance, Responsibility and Future" (the "Foundation").
2. One of the purposes of the Foundation is to make financial compensation available to "former forced laborers and to those affected by other injustices from the National Socialist period" ("Holocaust Survivors").
3. The German Federal Government is contributing five billion deutschmarks to the Foundation in the year 2000 and it is the main contributor to the capital fund of the Foundation.
4. The financial compensation payments made to eligible Holocaust Survivors are made available to them through specified partner organizations.
5. There is not any income tax payable to the Federal Republic of Germany in respect of the financial compensation payments that are made by the Foundation to eligible Holocaust Survivors, or that are made by the Foundation to specified partner organizations on behalf of eligible Holocaust Survivors.
Based on our understanding of the facts, the financial compensation payments described in 4 and 5 above are considered to be payments described in paragraph 81(1)(g) of the Act. Thus, such compensation received by a Canadian taxpayer who is an eligible Holocaust Survivor, or who is receiving such compensation in respect of an eligible Holocaust Survivor, is exempt from income tax in Canada.
We trust this is the information you require.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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