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.
5-903360
Dear Sirs:
Re: Accumulated Vacation Leave Whether considered Retiring Allowance
This is in reply to your letter of November 20, 1990 concerning the above-mentioned subject.
As indicated in Information Circular 70-6R2, we do not express opinions on specific proposed transactions other than as a reply to an advance income tax ruling. As a consequence thereof, we may only offer the following general comments.
When an employee terminates employment and a payment is made in respect of accumulated vacation leave not taken prior to retirement, the payment of said credits is considered to be ordinary remuneration and is included in the employee's income in the year of receipt pursuant to subsection 6(3) of the Income Tax Act as stated in paragraph 5 of Interpretation Bulletin IT-337R2. Since such a payment does not qualify as a "retiring allowance" as defined in subsection 248(1) of the Income Tax Act, it cannot be rolled over into a Registered Retirement Savings Plan.
The above comments are an expression of opinion only and, as indicated in Information Circular 70-6R2, they are not binding upon the Department. We trust however that they will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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