Income Tax Severed Letters - 2009-03-27

Principal Issues:
Could an amount paid by an employer to an employee's estate after his death, be rolled directly to the beneficiary's registered retirement savings plan under paragraph 60(j.1) of the Income Tax Act?

Position:
Question of fact. Possible if the amount is a retiring allowance.

Reasons:
The determination of whether the amount is a retiring allowance or a death benefit is a question of fact. However, if the amount is a retiring allowance received by an estate after the death of a retired employee, subsection 104(28) deems the amount to be received by the beneficiary. In these circumstances, the beneficiary may transfer the amount eligible under paragraph 60(j.1) of the Act to the beneficiary's RRSP.

XXXXXXXXXX 2008-030426
I. Landry, M. Fisc.
March 24, 2009

Principal Issues: 1) Is section 74.2 applicable on disposition occurring during the period of separation?
2) How can information be obtained from the partner disposing the property, in order to report the gain?

Position: 1) Yes - if no joint election is filed
2) We cannot comment

Reasons: 1) Application of the Act

XXXXXXXXXX V. Srikanth
2008-030283
March 19, 2009

Principal Issues: Will pension benefits paid to an Indian be partially exempt from tax if the contributions to the pension plan were made from employment income that was partially exempt from tax? What portion of the pension benefits will be exempt from tax?

Position: 1. Yes. 2. Question of fact--general comments provided.

Reasons: Previously taken position that pension income resulting from employment income that was exempt from tax is also exempt from tax.

2009-031022
XXXXXXXXXX L. Zannese
(613) 957-2747
March 18, 2009

Principal Issues: Assume that a non-Canadian-controlled private corporation ("non-CCPC") would pay a taxable dividend, that is designated as an "eligible dividend" pursuant to 89(14) of the Income Tax Act (the "Act"), in part, to shareholders who are non-resident of Canada. 1) Would the portion of the taxable dividend that is paid to the non-residents constitute a non-eligible taxable dividend? 2) If yes to question 1, at what time would the portion of the taxable dividend paid to the non-residents reduce the LRIP?

Position: 1) Yes. 2) Provided that, as a matter of law, the dividend becomes payable in the particular taxation year but before it is paid, the portion of such taxable dividend that is payable by the non-CCPC to the non-resident shareholders would be included under variable "G" of the definition of LRIP at the time the dividend is paid.

Reasons: Wording of the ITA.

Principales Questions: Une somme payée par un syndicat à un membre lors de son décès représente-t-elle une prestation consécutive au décès?

Position Adoptée: Non, il ne s'agit pas d'une prestation consécutive au décès. Il peut en outre s'agir d'un remboursement de cotisations syndicales.

Raisons: À notre avis, si les sommes ne sont pas payées en reconnaissance des services rendus par le membre décédé dans une charge ou un emploi, il ne peut s'agir d'une prestation consécutive au décès. Si un membre n'est pas décédé, la position de l'ARC dans des interprétations antérieures indique qu'une partie des sommes reçues par un membre vivant peut constituer un remboursement de ses contributions syndicales payées pour l'année d'imposition. Par conséquent, les contributions syndicales remboursées dans l'année ne seraient pas déductible. Si le montant remboursé à un syndiqué au cours d'une année est supérieur à ses cotisations payées de l'année, l'excédent doit être inclus dans le revenu en vertu de 6(1)j). Nous sommes d'avis que cette position pourrait s'appliquer à un contribuable décédé si le paragraphe 70(2) s'appliquait. Par ailleurs, nous n'avons pas assez de fait pour conclure que le montant de 5 000$ pourrait être un paiement provenant d'une police d'assurance-vie qui est généralement non imposable pour la personne qui le reçoit.

XXXXXXXXXX 2008-027924

Le 5 mars 2009