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 Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Dear Sirs:
We reply to your letter of February 19 concerning the tax treatment of the transfer of contributions by the trustees of a registered pension plan in Canada to the trustees of a pension plan in the U.S. under reciprocal provisions in the plans that you describe as money-follows-the man. The provisions are designed to protect the pension rights of employees who work for two or more employers that contribute to separate plans.
Paragraph 212(1)(h) of the Income Tax Act (Act) requires a non-resident to pay an income tax of 25% on every amount that a Canadian resident pays to him as a payment of a superannuation or pension benefit. Under the definition in subsection 248(1) of the Act, a superannuation or pension benefit includes any amount received out of a superannuation or pension fund. Therefore, the Canadian trustees would be liable for withholding Part XIII tax from a payment of funds to U.S. trustees. The Canada-U.S. Tax Convention does not limit the rate of withholding tax on lump-sum pension payments.
We hope the above will assist you.
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