7 July 1988 Income Tax Severed Letter 5-6205 - [880707]

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.

F. Francis (613)957-3498

July 7, 1988

Dear Sirs:

This is in reply to your letter of June 15, 1988, wherein you requested our views with respect to the reporting requirements of certain payments made to XXXX upon his termination from his employment.

We concur with your position that the 52 weeks Separation Pay will be considered salary or wages under subsection 5(1) of the Income Tax Act (the "Act") and as such, would be reported on a T-4.

Furthermore, we concur with your position that the 21 weeks severance pay and the 57. payment in lieu of foregone benefits will be considered to be a "retiring allowance" under subsection 248(1) of the Act. As a consequence thereof, the amount will be included in XXXX income under subparagraph 56(1)(a)(ii) of the Act and may be transferred to his registered retirement savings plan pursuant to, and within the limits contained in, paragraph 60(j.1) of the Act. As you noted, this amount would be reported on a T4A.

For your information, it is our position, as indicated in paragraph 36 of Interpretation Bulletin IT-470R , that the reimbursement of relocation expenses on termination of employment will be considered a taxable benefit unless the employee is moving from a remote place.

We trust the above comments will be of assistance to you.

Yours truly,

Wayne Douglas

for Director Financial Industries Division Rulings Directorate