5 April 1990 Administrative Letter 74816 F - German 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.

SUBJECT:  19(1) German Pension

This is in reply to your handwritten noted dated March 21, 1990 concerning the above-referenced matter.

Our understanding of the situation is that

(a)     

(b)     

(c)     24(1)

(d)     

(e)     

The sole issue on which you seek our views is whether the Department should tax only income portion of the pension payments.

Our Comments

In our view, the answer is no.  The Department's general position in this regard is clearly set out in IT-499, as indicated in your note.  That is, where a payment is one to which subparagraph 56(1)(a)(i) of the Act applies, the total payment is subject to tax notwithstanding that the recipient's own contributions to the pension plan were not deductible.

Where payments originating from Germany are ones to which subparagraph 56(1)(a)(i) of the Act applies, our files indicate that we have consistently stated that the full amount is taxable unless exempted under either paragraph 81(1)(g) of the Act or Article 18 of the German Treaty, neither of which apply here.

If the payments were being received pursuant to an annuity contract, the results would of course differ in that a deduction would be available under paragraph 60(a) in respect of capital portion, However, you indicate in your note that this point has been considered and the opinion of both the German authorities and the Revenue Canada officials involved to date is that the payments are being made out of a pension plan.  We have to reviewed the material in your file and could find nothing therein to justify a different opinion.

Your file is returned herewith.

DirectorFinancial Industries DivisionRulings Directorate