13 July 1989 Administrative Letter 73996 F - Lump Sum Payment to Widow under Pension Plan Eligible for Special Averaging Provision

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.

Re:  Section 40 of the ITAR 24(1)

Your round trip memorandum of May 31, 1989 addressed to the Source Deductions Division in Head Office was referred to this office for reply.

In your memorandum you referred to a situation where an employee belonged to a pension plan with a guaranteed period of 5 years.  He retired, began receiving pension payments and then died within the guaranteed period.  His spouse subsequently, and after 1973, received a lump sum payment under the plan, and requested tax relief under section 40 of the ITAR in respect of the portion of the lump sum payment accrued to December 31, 1971.

It is our view that the portion of the lump sum payment that accrued to December 31, 1971 in the scenario described by you is eligible for the special averaging provisions in ITAR 40 by reason of subsection (7) therein.  Accordingly, the lesser amount determined pursuant to subsection 40(7) of the ITAR should be reported in the appropriate box in D of the T4A supplementary slip.

For your information our position is consistent with our long standing policy in such cases.  It would, however, be helpful in future if you outlined the decision by Appeals in any referral to Head Office.

We trust that our comments are sufficient for your purposes.

for DirectorFinancial Industries Division Rulings Directorate