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.
XXXXXXXXXX 5-923584
M. SheaDesRosiers
(613) 957-8953
Attention: XXXXXXXXXX
February 5, 1993
Re: Retiring Allowance
Subsection 248(1) of the Income
Tax Act (the "Act")
This is in reply to your letter of December 1, 1992 concerning the above-mentioned subject.
As indicated in Information Circular 70-6R2, we do not give opinions on proposed transactions other than as a reply to an advance ruling request. However, we will offer the following general comments.
Subsection 248(1) of the Act defines "retiring allowance" 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 always a question of fact whether an individual has suffered the loss of an office or employment. It is the Department's position that, where in an arm's length situation, a long term employee is laid off or has retired without any assurance of being rehired at the time, and receives an amount from his employer in recognition of long service or in respect of a loss of an office or employment, such an amount would be considered a "retiring allowance" regardless of the fact that the employee might be rehired, by the former employer, at a later date when circumstances have changed.
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 if, at the time the employee retires, it was foreseen that the employee would be rehired by his former employer.
Accordingly, an amount received by the employee on account of his retirement in such circumstances would not be considered a retiring allowance. It is to be noted that the question of whether an employee has really suffered a loss of employment can only be determined after all the facts and the terms and conditions of the contract have been considered.
The above comments are an expression of opinion only and are not binding on the Department. We trust, however, that they will be of assistance to you. Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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