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: Whether social security pensions received from Hungary are taxable in Canada.
Position: No.
Reasons: Not taxable in Hungary, therefore not taxable in Canada- see subparagraph 4(c) of Article 18 of the Canada-Hungary Tax Convention.
XXXXXXXXXX 2003-000301
J. Stalker
March 11, 2003
Dear XXXXXXXXXX:
Re: Hungarian Social Security
This is in reply to your facsimile to us, which we received February 13, 2003. We understand from our follow-up phone discussion (Stalker/XXXXXXXXXX) that your chief concern is the taxation of social security payments received from Hungary by Canadian residents.
Pursuant to subparagraph 4(c) of Article 18 of the Canada-Hungary Tax Convention, Canada cannot tax pensions and allowances paid under the social security legislation of Hungary and received by Canadian residents so long as the payments are not subject to tax in Hungary. It is our understanding that social security payments are not taxable in Hungary and accordingly Canada may not tax these payments.
However, note that the Canadian individual must still include the social security pension receipts in his or her income pursuant to subparagraph 56(1)(a)(i) of the Income Tax Act (Canada) (the "Act"). Since the social security pension is exempt because of a treaty provision, the same amount is then deducted from taxable income pursuant to subparagraph 110(1)(f)(i) of the Act.
We trust our comments are helpful.
Yours truly,
R.S. Biscaro, CA
Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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