18 July 1988 Income Tax Severed Letter 5-6162 - [Receipt of pension income received from the United Nations]

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.

Revenue Canada Taxation

Head Office

K.B. Harding (613) 957-2129

JUL 18 1988

XXXX

This is in reply to your letter of October 23, 1987 addressed to the Toronto District Taxation Office which was received by this Division on June 13, 1988.

Your letter indicates that you are concerned with a situation where an individual is in receipt of pension income received from the United Nations. The individual is a Canadian citizen who had previously worked for the United Nations Paris office for a number of years and retired to South America.

The individual has become a resident of Canada for the purposes of the Income Tax Act (Act) and you are concerned whether the pension income received by the taxpayer from the United Nations is subject to tax in Canada.

Subparagraph 56(1)(a)(i) of the Income Tax Act (Act) requires a resident of Canada to include in income any amount received by him in the year as, on account or in lieu of payment of, or in satisfaction of a superannuation or pension benefit. It is our view that the taxpayer in question will be subject to tax in Canada on amounts he receives as a pension income from the United Nations. In order to ensure that the individual is not subject to double taxation, he will be granted a foreign tax credit in accordance with subsection 126(1) of the Act.

In order to determine the source of a pension payment it is necessary to determine where the payment arises. It is our understanding that while the pension may be received from the Paris office it is in fact paid out of the United Nations pension plan in New York. Accordingly, it would appear that the Canada-U.S. Income Tax Convention (1980) would be applicable to such payments rather than the Canada-France Tax Convention. In such a case, Canada has the right to tax the pension payments, subject of course to any exemptions provided in Article. XVIII of the Canada-U.S. Income Tax Convention.

We trust these comments are suitable for your purposes and we will forward a copy of our reply to the Toronto District Taxation Office for their information.

for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch

c.c. TORONTO DISTRICT OFFICE