28 May 1993 Income Tax Severed Letter 9311477 - Canada-Italy Income Tax Convention—Pensions

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.

                                                      May 28,1993

      Sudbury District Office                         Rulings Directorate
                                                      K.B. Harding
                                                      (613) 957-2111
      Attention:   Carmen Menard
                   CAD Sud. D.O. 19

                                                      931147

Article XVIII Canada-Italy Income Tax Convention

This is in response to your Round Trip Memorandum received by Fax on April 22, 1993 wherein you requested our opinion whether certain amounts which are included in income but are subsequently excluded from taxable income should be excluded from the term income for purposes of determining whether Italian social security payments are exempt from tax in Canada by virtue of paragraph 3 of Article XVIII of the Canada-Italy Income Tax Convention (the "Convention").

In particular you were concerned with Workers' compensation payments (56(1)(v)), social assistance payments (56(1)(u)) and Old Age supplement (56(1)(a)(i)(A)) which are included in income but are specifically deducted in determining taxable income by virtue of paragraph 110(1)(f) of the Act.

Paragraph 3 of the Convention provides that any social security payment arising in Italy and paid in a taxable period to an individual who is a resident of Canada shall be taxable only in Italy provided that the income of the individual for the period that is taxable in Canada in aggregate, excluding the said social security payments, does not exceed the amount of twenty four thousand Canadian dollars or twenty seven million Italian lira whichever is the greater.

The News Release, dated October 4, 1989, issued by Revenue Canada, Taxation clearly indicates in the "Background Information" that the portion of the pension paid under the social security laws of Italy, which represents the amount necessary to increase the pension to the minimum amount payable (guarantee income supplement), would be exempt from tax in Canada where the individual's total income does not exceed $24,000 Canadian or 27 million lira. Accordingly, it is our view, based on the intention expressed in the News Release, that the payments outlined in paragraph 2 above must be included in the calculation of income in determining whether the income exceeds twenty four thousand Canadian dollars or twenty seven million lira before determining whether or not the social security payment from Italy is exempt from tax in Canada.

We trust these comments are adequate for your purposes.

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