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 Issues: Can certain amounts received in a specific fact situation qualify as a receipt of a retiring allowance?
Position: The questions were referred to the TSO.
Reasons: This is a question of fact which must be addressed by the TSO. Furthermore, the fact situation was complex and inadequate information was provided in the submission.
January 22, 2002
VANCOUVER ISLAND TSO HEADQUARTERS
Mr. Ken Slawson W.C. Harding
Director (613) 957-8953
Attention: Sharon Reimer
CPP-EI-Team-Leader
2001-011194
XXXXXXXXXX
On November 21, 2001, Ms. Liz Curnow of the Vancouver Island Tax Services Office provided our office with a copy of an enquiry submitted by XXXXXXXXXX concerning the proper treatment of certain awards made to an employee as a consequence of an arbitration hearing related to the employee's termination. A copy of the submission is attached.
As indicated in our recent telephone messages (Reimer/Harding), we have examined the information provided by XXXXXXXXXX and discussed it with Mr. David Ferris, a Program Officer, with Headquarters' CPP/EI Eligibility Division. Together, we have agreed that additional information must be obtained and that the matter should be referred to your office before any determination is made.
In considering your reply, please note the commentary in paragraph 9 of Interpretation Bulletin IT-337R3, Retiring Allowances, with respect to the award of damages in situations where an employee retains his or her employment or is re-instated. While it is possible the amount paid to the employee could constitute a non-taxable award of damages, there is no indication that this is the case in this situation. In the alternative, we are of the opinion that the facts provided support the view that, as a result of the re-instatement, the award represents employment income even though the employee ultimately chose not to return to that employment.
If an amount is a retiring allowance, it may be transferred to an RRSP as discussed in IT-337R3. If the amount is not a retiring allowance, it may still be paid into an RRSP as a normal contribution subject to the limitations set out in section 146 of the Income Tax Act.
For your information, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on the Department's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at 613 957-0682. The severed copy will be sent to you for delivery to the client.
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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