27 August 1991 External T.I. 911810 F - Maximum Amount of Pension Income

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.

Attention      19(1)

Dear Sirs:

Re: Article 19 Canada-Jamaica Income Tax Convention Request for Technical Interpretation

This is in reply to your letter dated June 24, 1991 and our telephone conversations related thereto regarding a technical interpretation on the application of subparagraph 4(b) of Article 19 of the Canada-Jamaica Income Tax Convention (the "Convention").

Generally, pensions received from Jamaica by a Canadian resident will be subject to tax in Canada.  Pursuant to subparagraph 4(b) of Article 19 of the Convention, pensions received from Jamaica from one of the three sources specified therein shall not be taxable in Canada so long as they are not subject to Jamaican tax.

It is your understanding that under the Jamaican Income Tax Act the following deductions or exemptions are available to individuals in computing their taxable income in Jamaica.

There is a basic exemption of $10,400 Jamaican available to all individuals.  There is also a $15,000 Jamaican deduction that can be made against pension income for persons under the age of 55, i.e. the deduction is to the extent of pension income up to a maximum of $15,000 Jamaican.  For individuals 55 or older this deduction may be made against any source of income.  Lastly, there is a further deduction of $15,000 Jamaican for individuals 65 or older that can be deducted against any source of income.

For purposes of our analysis we have accepted your comments regarding Jamaican law, however we express no opinion as to the validity or accuracy of such comments.

You have asked what is the maximum amount of pension income from Jamaica that can be received in a taxation year by a resident of Canada aged 65 or over and not be subject to tax in Canada pursuant to subparagraph 4(b) of Article 19 of the Convention.

The answer is dependent on the meaning of the phrase "not subject to Jamaican tax".  In our view it is intended that for pension income to be considered "not subject to Jamaican tax" it is necessary that the pension income is either exempt from Jamaican tax by virtue of its character as pension income or is eligible for a deduction that is specific to that type of income.

Under this interpretation, provided the individual can establish that the pension income is from one of the sources specified in subparagraph 4(b) of Article 19 of the Convention, the maximum amount of pension income received from Jamaica that would not be taxable in Canada under that subparagraph would be $15,000 Jamaican.  Furthermore the $15,000 Jamaican exemption would only be available to an individual who is under 55 years of age, as beyond that age the deduction is no longer specific to pension income.

We hope our comments are of assistance.

Yours truly,

for DirectorReorganizations and Non-Resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch