14 January 1992 External T.I. 9133215 F - Definition Of Pension Plan

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)

January 14, 1992

Dear Sirs:

Re:  Definition of a Superannuation Plan

This is in reply to your letter of October 15, 1991, wherein you requested our clarification as to what constitutes a superannuation plan and whether or not a benefit paid out of a plan described in general terms in your letter would be a pension benefit for purposes of subparagraph 56(1)(a)(i) and paragraph 60(j) of the Income Tax Act (the "Act").

A superannuation or pension benefit is defined in subsection 248(1) of the Act to include any amount received out of or under a superannuation or pension fund or plan.  The Act, however, does not define what a superannuation or pension fund or plan is and there is limited jurisprudence related to this issue.  Accordingly the ordinary meaning of the terms must be used and it will remain a question of fact whether or not any specific fund or plan is a pension plan.

The Concise Oxford Dictionary of Current English, seventh edition defines "pension" as:

     "periodic payment made esp. by government, company, or employer, in consideration of past service or on retirement etc.; similar payment to person who is not a professed servant for good will, secret service, etc. or to artist, scientist, etc.,to enable him to carry on work of public interest; periodic payment by government to persons above specific age (old-age pension) or disabled or widowed ;..."

while The Webster's New International Dictionary of the English Language defines "pension plan" as:

     "systematic provision by an employer for definitely determinable periodic incomes to employees upon retirement with or without funding;..."

and Black's Law Dictionary, sixth edition, incorporates these two concepts as the basis of its definitions before expounding on the definition of a Pension Plan as codified for U.S. taxation and labour law purposes.

No relevant tax convention appears to provide any general statement as to what might constitute a pension plan.  However, Section 3 of The Income Tax Conventions Interpretation Act does indicate that where a term is not defined or only partially defined in a convention or it is to be defined by reference to the laws of Canada, then that term will have the meaning it has for purposes of the Income Tax Act at the time it is being applied.  Accordingly, while a specific plan may or may not be a pension plan in a country with which Canada has a tax convention, it will still remain a question of fact as to whether or not that plan will be a pension plan in Canada.

While we cannot provide you with a definitive answer to your enquiry at this time, should you client wish, an advance income tax ruling with respect to his proposal to request payment of his entitlement under the subject plan may be provided if a request for it is submitted in the manner set out in Information Circular 70-6R2, a copy of which is enclosed.

We trust that our reply is satisfactory to your needs.

Yours truly,

for DirectorFinancial Industries DivisionRulings DirectorateLegislative and Intergovernmental  Affairs Branch