28 September 1988 Income Tax Severed Letter 5-6303 - [British Pension]

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.

XXXX

O.S. Laurikainen (613) 957-2125

SEP 28 1988

XXXX

Re: British Pension

This is in response to your letter of July 4, 1988. You have enquired how your British pension income should be taxed in Canada.

The Canada-U.K. Tax Convention (1978) provides that pensions arising in the United Kingdom and paid to a resident of Canada shall be taxable only in Canada. The fact that the money remains in England does not effect Canada's authority to tax. Accordingly, you are correct to declare the British pension income on your Canadian income tax return.

The taxation of the pension income received by your friend would be governed by the provisions of the Canada-U.S. Income Tax Convention (1980). This convention is different from the Canada-U.K. Tax Convention (1978) in that it contains a provision which states that pension benefits received by a resident of Canada under the social security legislation of the United States shall be taxable only in Canada except that one-half of such benefits would be exempt from taxation.

Tax conventions are subject to negotiation and there are often differences in the way that Canada taxes similar sources of income received by residents of Canada from different countries. Since the Department of Finance has the responsibility for negotiating tax agreements and conventions you may wish to contact the Department if you have any concerns over such treatment.

We hope that the above will be of assistance to you.

Yours truly,

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