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.
DATE September 11, 1986
TO- Appeals and Referrals Division
FROM - Specialty Rulings Directorate K.B. Harding 957-2129
ATTENTION H. Roodman
RE: XXXX
INDEXED
This is in reply to your memorandum of June 24, 1986 concerning the taxability of amounts distributed from an Individual Retirement Account (IRA).
It is our understanding that
XXXX
We have taken the view that all payments out of an IRA will be subject to tax in Canada pursuant to paragraph 56(1)(a) of the Income Tax Act. However, our Division is presently reviewing its position with respect to IRAs, Keogh plans, rollover by Canadian residents from a U.S. pension fund to IRAs and other related problems with Article XVIII of the Canada-U.S. Income Tax Convention (Convention).
While it is arguable that an IRA fell within subsection 75(2) prior to 1982, it is doubtful that any Canadian taxpayer has included such amounts in their income. We confirm your view that since subsection 75(3) was instituted, IRAs were excluded from the treatment set out in subsection 75(2). The attached technical notes issued by the Department of Finance on May 9, 1985 confirms this position.
It is our understanding that under U.S. law there is no withholding tax on amounts distributed to American citizens whether living at home or in a foreign country since such individuals are required to file a U.S. income tax return.
It is our position that for purposes of the Convention that amounts received out of an IRA will be a payment from a retirement plan and therefore fall within Article XVIII of the Convention.
We trust these comments are suitable for your purposes.
for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
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