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.
January 24, 2001
XXXXXXXXXX
Dear Colleague:
Thank you for your correspondence of December 11, 2000, concerning the Canada Customs and Revenue Agency's reply of June 30, 2000, to XXXXXXXXXX, regarding the payment of expense allowances and retiring allowances to elected officials.
I understand that Mr. Wayne Harding of the Income Tax Rulings Directorate discussed the letter with XXXXXXXXXX of your office, and that an explanation of the taxability of a retiring allowance paid to a retiring official of a municipality was provided. To summarize, the amount of a retiring allowance is negotiated between the employee and employer and is not limited by the Income Tax Act. In addition, under subsection 81(3) of the Act, no portion of a retiring allowance can be exempted from taxation, therefore, no portion of it can be treated as a tax free allowance. Accordingly, the full amount of any retiring allowance received by an official must be included in income in the year it is received.
I trust my comments will be of assistance.
Yours sincerely,
Martin Cauchon
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© Her Majesty the Queen in Right of Canada, 2001
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