21 July 2003 Internal T.I. 2003-0183657 - Section 217 Election & Workers Comp217

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 worker's compensation is included in a "person's income" in subparagraph 217(3)(b)(ii) of the Act if the person is a resident of Portugal who elects, pursuant to section 217 of the Act, to file a return of income pursuant to Part I of the Act, in respect of CPP.

Position: No

Reasons: The CPP is not taxable in Canada, pursuant to the Canada-Portugal Income Tax Convention, Article 18, paragraph 2. Therefore there is no need to elect pursuant to section 217 to file a return of income pursuant to Part I in respect of the CPP. XXXXXXXXXX

July 21, 2003

Kitchener/Waterloo Tax Services Office Headquarters
166 Frederick St. Income ax Rulings Directorate
Kitchener ON N2G 4N1
Gilles Gosselin
Attention: Thom Bartleman (613) 946-3553
Senior Individual Enquiries Officer
2003-018365

Section 217 Return and Worker's Compensation

We are writing in response to your letter dated January 17, 2003, and our recent telephone conversations (Bartleman/Gosselin).

We understand that you are dealing with a resident of Portugal that received in the XXXXXXXXXX taxation year about $XXXXXXXXXX from the Canada Pension Plan (CPP) and about $XXXXXXXXXX from a worker's compensation plan in Canada. You asked us whether the worker's compensation would be included in the "person's income" in subparagraph 217(3)(b)(ii) of the Income Tax Act (Canada)(the "Act") if the resident of Portugal elected, pursuant to section 217 of the Act, to file a return of income under Part I of the Act, in respect of the CPP for the XXXXXXXXXX taxation year.

As discussed, pursuant to the Canada-Portugal Income Tax Convention, Article 18, paragraph 2, the CPP is not taxable in Canada because that provision requires that the CPP be greater than CAN$12,000, or its equivalent in Portuguese currency, in order for Canada to maintain its right to tax the CPP. Accordingly, the resident of Portugal would not file an election pursuant to section 217 of the Act to file a return of income pursuant to Part I of the Act, in respect of the CPP and there is no issue as to whether the worker's compensation would be included in the "person's income" in subparagraph 217(3)(b)(ii).

XXXXXXXXXX

We trust that our comments are of assistance. If there are any comments or questions, please contact us.

Jane Stalker, Section Manager
International Section III
for Division Director
International and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch
- 3 -