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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
5-930048
XXXXXXXXXX Adèle St-Amour
(613) 957-8953
Attention: XXXXXXXXXX
March 10, 1993
Dear XXXXXXXXXX
Re: Retiring Allowance
This is in response to your letter dated January 8, 1993, requesting our opinion concerning a retiring allowance.
It is our understanding that your enquiry relates to a specific completed transaction and should be addressed to the relevant District Taxation Office. The following comments are, therefore, of a general nature only, and are not binding on the Department.
The definition of "retiring allowance" as found in paragraph 248(1) of the Income Tax Act (the "Act") includes an amount received 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 or an affiliate of the 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 or an affiliate. Accordingly, an amount received by the employee on account of his retirement in such circumstances would not be considered a retiring allowance.
As indicated in paragraph 21 of Information Circular 70-6R2 dated September 28, 1990, the above comments do not constitute an advance income tax ruling and are not binding on the Department. We trust the above comments will be of assistance to you. If you have any other questions do not hesitate to contact us.
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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