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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
1. Whether pension income received from the UNJSPF in form of a lump sum payment or periodic pension payment is taxable in Canada?
2. Whether the amount from UNJSPF could be transferred to an RRSP?
1. Yes, pursuant to subparagraph 56(1)(a)(i) of the Act.
2. If the plan is an RPP, it is possible for a lump sum.
1. It is a "superannuation or pension benefit" as defined in subsection 248(1) of the Act. Furthermore, section 18 of Article V of the Convention on the Privileges and Immunities of the United Nations ("Convention") provides exemption from tax to those United Nations officials on the salaries and emoluments paid to them by the United Nations. We are not aware of any provision in the Convention that would exempt from Canadian tax pensions received from the United Nations. However, part of the pension payments might be exempt pursuant to subparagraph 110(1)(f)(i) of the Act.
2. E55161. UNJSPF is a RPP pursuant to the Act.
L. J. Roy, CGA
February 21, 2002
Re: Pension from United Nations Joint Staff Pension Fund (UNJSPF)
This is in reply to your letter of June 7, 2001, which was addressed to the XXXXXXXXXX Taxation Office and forwarded to us on August 24, 2001, requesting our views regarding the taxation under the Income Tax Act (the "Act") of amounts that will be received on retirement from the UNJSPF. We apologize for the delay in responding to your letter.
You are a resident of Canada who has contributed to the UNJSPF while working for the XXXXXXXXXX. You expect to retire in the year of XXXXXXXXXX from the XXXXXXXXXX and you will be entitled to receive a lump-sum payment of one-third of the total amount accumulated during your employment and the remaining amount will be paid out in monthly installments.
It is our understanding that the UNJSPF is a registered pension plan ("RPP") for the purposes of the Act. Consequently, our comments will be based on that fact and are not applicable if the plan is not an RPP. In this regard, you may wish to contact the administrators of the UNJSPF to confirm the status of the plan when you plan to retire.
Canadian residents are generally required to include in their income all amounts received from an RPP as a "superannuation or pension benefit" pursuant to subparagraph 56(1)(a)(i) of the Act. Whether pension payments received from the UNJSPF are in the form of a lump sum payment or a periodic pension payment, or whether such payments include a return of premiums and/or an income element, such payments, in their entirety, would be required to be included in the taxpayer's income in the year they are received.
There are certain tax exemptions in Canada available to employees of certain international organizations. However, these exemptions are generally restricted to remuneration from employment and do not extend to pension income. Subparagraph 110(1)(f)(iii) of the Act provides for a deduction in the computation of taxable income with respect to "income from employment with prescribed international organization" which includes XXXXXXXXXX .
The Agency would recognize any tax exemptions granted to the employees and officials of the XXXXXXXXXX pursuant to the Convention on the Privileges and Immunities of the United Nations ("Convention"). However, section 18 of Article V of the Convention only provides exemption from tax to those United Nations officials on the salaries and emoluments paid to them by the United Nations. We are not aware of any provision in the Convention that would exempt from Canadian tax pensions received from the United Nations.
It is our understanding that the UNJSPF is an entity constituted within the United Nations, the administration and control of which are the responsibility of the Secretary-General of that organization. Since the United Nations headquarters are located in the United States, the application of the Canada-U.S. Income Tax Convention (the "treaty") must be considered. Pursuant to paragraph 1 of Article XVIII of the treaty, Canada maintains its right to tax pension income arising in the U.S. and paid to a resident of Canada to the extent such income would have been subject to tax in the U.S. had the recipient been a resident of the U.S.
In this regard, it is our understanding the United States would not tax its residents on the portion of a pension payment that is a refund of the participant's own contributions. Accordingly, the portion of the taxpayer's pension paid by the UNJSPF, whether that pension receipt is a lump sum payment or periodic pension payment, that is a refund of contributions may be deductible in computing the taxpayer's taxable income in Canada pursuant to subparagraph 110(1)(f)(i) of the Act as treaty-exempt income.
In order to have the deduction pursuant to subparagraph 110(1)(f)(i) of the Act, you should obtain a letter from the U.S. tax authorities confirming that they do not tax its resident on a portion of the pension from UNJSPF and that such an amount should be exempt from Canadian tax in accordance with paragraph 1 of Article XVIII of the treaty.
A Registered Retirement Savings Plan is a Retirement Saving Plan that you establish and contribute to, and that we registered. Section 147.3 of the Act permits the transfer of a single amount from an RPP to a Registered Retirement Savings Plan. In that respect, Interpretation Bulletin IT-528, entitled "Transfers of Funds Between Registered Plans" (which is available at your local tax services office or on the internet at www.ccra-adrc.gc.ca/formspubs/menu-e.html) provides the Agency's views concerning such transfers.
The foregoing opinions are not rulings and in accordance with the guidelines set out in IC 70-6R4 they are not binding on us.
We trust the above comments will be of assistance to you.
Financing and Plans Section
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislative Branch
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