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 MEMORANDUM
DATE MAY 4 1988
TO- Provincial and International Relations Division
Mr. R.G. D'Aurelio Director
FROM- Specialty Rulings Directorate
K.B. Harding
957-2129
SUBJECT: Taxation of payments received from an IRA by residents of Canada
This is in reply to your memorandum of March 31, 1988 wherein you requested we confirm our treatment of amounts received out of an IRA by a resident of Canada.
Mr. Short was concerned with the situation where a Canadian resident transferred amounts received out of a U.S. pension fund to an IRA and subsequently withdraws the amount out of an IRA. In view of our position that most amounts received out of an IRS would be exempt from tax in Canada, Mr. Short requested we take the position that pension payments transferred to the IRA would retain their character in an IRA so that when the amounts are subsequently paid out of the IRA the pension rollover would be subject to tax in Canada under paragraph 56(1)(a) of the Act rather than exempt from tax as income from an IRA.
This will confirm that we propose to take the position that U.S. pension payments transferred to an IRA, which are exempt from tax in Canada by virtue of paragraph 1 of Article XVIII of the Canada-U.S. Income Tax Convention, will be subject to tax in Canada pursuant to paragraph 56(1)(a) of the Act when subsequently paid out of the IRA. However, we are not certain whether or not the Courts will support this position in view of the wording in subsection 108(5) of the Act.
We trust this is adequate for your purposes.
Director General Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
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