28 August 2001 External T.I. 2001-0095275 - FOREIGN PENSION TRANSFER

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: Can a pension benefit from the U.K. be transferred to Canada on a tax-deferred basis?

Position: Yes.

Reasons: Subparagraph 60(j)(i).

XXXXXXXXXX 			2001-009527
G. Kauppinen
August 28, 2001

Dear XXXXXXXXXX:

Re: Pensions Transferred from the U.K. to Canada

This is in reply to your facsimile transmission dated July 12, 2001 regarding pensions transferred from the United Kingdom ("U.K.") to Canada.

Our Comments

Subparagraph 60(j)(i) of the Income Tax Act (the "Act") allows a deduction in computing income for Canadian income tax purposes for a lump-sum transfer to a registered pension plan ("RPP") or a registered retirement savings plan ("RRSP") in respect of a transfer of a foreign superannuation or pension benefit (i.e., the transfer cannot be part of a series of periodic transfers). The pension benefit from the foreign (i.e., non-registered) pension plan must be in respect of services rendered by an individual while that individual was not a resident of Canada. (Note that the deduction under subparagraph 60(j)(i) of the Act is not allowed if a deduction for the same pension benefit transfer can be taken under subparagraph 110(1)(f)(i) of the Act because of a specific provision in a bilateral income tax convention (treaty) between Canada and the foreign country from which the foreign pension originates.)

In addition, to be eligible for a deduction under paragraph 60(j) of the Act for a transfer of an individual's foreign superannuation or pension benefit to that individual's RPP or RRSP, the individual has to include such a benefit in income for the year under subparagraph 56(1)(a)(i) of the Act and the transfer has to be made in the year the amount is included in the individual's income or within 60 days after the end of the year that the amount is included in the individual's income.

Please refer to paragraph 26 of Interpretation Bulletin IT-528 entitled, Transfers of Funds Between Registered Plans, in respect of the foregoing provisions of the Act.

A pension or superannuation benefit from a U.K. pension plan could be transferred to a Canadian RRSP and deducted pursuant to the provisions of subparagraph 60(j)(i) of the Act as there is no provision in the Canada-U.K. Income Tax Treaty which would allow a deduction for such a transfer under subparagraph 110(1)(f)(i) of the Act.

The concept of a "locked-in RRSP" has no significance for federal income tax purposes (i.e., under the Act, a locked-in RRSP is the same as an RRSP which is not "locked-in"). Whether an RRSP would have to be "locked-in" in respect of a transfer from a foreign pension plan is governed by the various provincial Pension Benefits Standards Acts or a similar law of a province. In addition, the federal Pension Benefits Standards Act governs the territories and federally regulated industries.

We trust our comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch