29 March 1993 Income Tax Severed Letter 9303377 - Indians—Lump-sum Pension Payments

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. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

                                       March 29, 1993

EDMONTON DISTRICT OFFICE               Business and General
E.J. Schermann, Chief of Audit           Division
Attention: R. Kormos                   Glen Thornley
           Source Deductions           (613) 957-2101

                                       930337
  Status Indians—Lump-Sum Pension Payments
This is in reply to your Round Trip Memorandum of February
3, 1993 concerning lump-sum payments made by 

                    XXXXXXXXXX

All of the contributors also live on the Reserve. You ask if, under the circumstances, it is appropriate to waive taxes on the lump-sum payments out of the Plan.

Had the payments been received prior to December 31, 1992 they would have been covered by the Indian Remission Order, however, as the payments will not be received until 1993 and the Remission Order is no longer applicable it is necessary to apply the "connecting factors" test arising from the judgement in the Glenn Williams case, ( 92 DTC 6320) to determine if there are factors connecting the income (payments out of the Plan) to a reserve.

In our view, the following facts are sufficient to make such payments exempt under section 87 of the Indian Act and paragraph 81(1)(a) of the Income Tax Act: contributions to the Plan were made from employment income earned on the XXXXXXXXXX, the employer was resident on the reserve, the recipients reside on the reserve and the payments will be sent to them on the reserve. Thus, it is appropriate to waive withholding on the payments.

We trust this is the information you require.

R. Albert for Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch

c.c. Rick Owen