24 January 2002 External T.I. 2001-0111745 - UK PENSION PLAN TRANSFER RRSP

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.

PRINCIPAL ISSUE:

Whether a UK pension plan can be transferred to an RRSP?

Position:

Question of fact.

REASON:

Subject to Article XVII of UK treaty and paragraph 56(1)(a).

XXXXXXXXXX 			2001-011174
L. J. Roy, CGA
January 24, 2002

Dear XXXXXXXXXX:

Re: Transfer of UK pension plan to Canada

This is in reply to your letter of May 30, 2001, wherein you requested our authorization to transfer your UK pension plan to a registered retirement savings plan (the "RRSP"). We apologize for the delay in responding to your letter.

Your question relates to a proposed transfer and a technical interpretation concerning the tax consequences can only be provided in the context of an advance income tax ruling. We may provide, however, the following general comments which are not binding on the Agency.

An amount received from a foreign superannuation fund or plan is generally considered to be a "superannuation or pension benefit" as defined in subsection 248(1) of the Income Tax Act (the "Act"). Where such an amount is attributable to services rendered while the recipient was not resident in Canada, it is taxable under subparagraph 56(1)(a)(i) of the Act.

Subparagraph 60(j)(i) of the Act allows a deduction in computing income for Canadian income tax purposes for the amount of a superannuation or pension benefit received out of a foreign pension plan that is contributed to an RRSP. To be eligible for a deduction under paragraph 60(j) of the Act, the benefit received by the individual must be attributable to services rendered by an individual while that individual was not a resident of Canada and included in his income for the year under subparagraph 56(1)(a)(i) of the Act. Also, the contribution to an RRSP 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.

A deduction under subparagraph 60(j)(i) of the Act is not allowed if a deduction for the same pension benefit 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 or for benefit that is part of series of periodic payments. However, there is no provision in the Canada - U.K. Income Tax Treaty which would allow a deduction pursuant to subparagraph 110(1)f)(i) of the Act.

It is also our 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 and cannot be transferred to an RRSP under the provisions of paragraph 60(j) of the Act.

We trust the above comments will be of assistance to you.

Manager
Financing, Leasing and Plans Section
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislative Branch