6 May 1991 External T.I. 9110375 F - Retiring Allowances

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.

5-911037

Dear Sirs:

Re:  Retiring Allowances

This is in reply to your letter of April 12, 1991, in which you requested a ruling on three questions concerning retiring allowances.  As explained in our telephone conversation (Baldwin) of April 22, 1991, we cannot provide an advance income tax ruling on global basis but rather only on specific fact situations. However, we can offer the following interpretation of subsection 60(j.1) of the Income Tax Act (the "Act") with respect to retiring allowances.

Retiring allowance is defined in subsection 248(1) to mean an amount received by an individual upon or after retirement from an office or employment in recognition of one's long service or in respect of a loss of office or employment.  It is a question of fact whether an individual has suffered the loss of an office or employment.

In a situation where an employee is rehired by his former employer shortly after leaving an office or employment, it is the Department's position that the employee has not suffered a loss of employment.  As a consequence thereof, a payment received by the employee in respect of any such departure would not be considered a retiring allowance.

The Department in of the view that where, in an arm's length situation, a long term employee has retired without any assurance of being rehired at the time, and has received payment from the employer in recognition of long service, the payment would normally be considered to be a retiring allowance regardless of the fact that the employee is rehired at a later date when circumstances have changed.

With respect to your third question it is a question of fact which can only be determined after an examination of the terms and conditions of the new employment contract and any other relevant documents.

The above comments are an expression of opinion only and are not binding on the Department.  We trust however that they will be assistance to you.

Yours truly,

for DirectorFinancial Industries DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch