29 April 1982 Income Tax Severed Letter A-6558

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.

Re: XXX

This is in reply to your letter of March 24, 1982 concerning a U.S. resident who intends to transfer to an I.R.A. (a U.S. Plan) the accumulated funds he now has in a Canadian pension plan.

We confirm your views that the full amount transferred out of a Canadian pension plan would be subject to withholding tax under paragraph 212(1)(h) of the Income Tax Act, notwithstanding that the non-resident did not receive any tax relief for his personal contributions to the plan. We have assumed, however, that for each of the years to which the payment may reasonably be regarded as attributable, the non-resident was either a resident of Canada or employed in Canada. If he were neither in those years, no part of the payment would be subject to Part XIII tax. In this letter regard, we refer to you to paragraphs 3 and 4 of Interpretation Bulletin IT-76R a copy of which is enclosed for your perusal.

We would point out that Article VIA of the Canada-U.S. Tax Convention is not applicable, since that Article exempts only payments of a periodic nature. Also, by virtue of Article XI of that Convention, the rate of withholding tax is limited to 15%.

Should the non-resident opt to proceed with the proposed transfer, we suggest he be advised of the election available under section 217 of the Act. In this regard, we are enclosing a copy of IT-163R.