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
Attention: XXXXXXXXXX
Dear Sirs:
RE: Advance Ruling Request XXXXXXXXXX
This is in reply to your letter of May 5, 1993 requesting an advance income tax ruling concerning amounts paid to certain individuals by the XXXXXXXXXX on termination of their employment.
As discussed during our (XXXXXXXXXX/Delorey) telephone conversation on May 21, we are not able to provide the requested ruling as the relevant transactions have already been completed; i.e., the amounts have already been paid. We offer, however, the following general comments.
It is our view that where, in an arm's length situation, an individual has been terminated without any assurance at the time of termination of being re-employed, an amount received on termination and properly characterized as a retiring allowance will not be disqualified as such solely because the individual is subsequently re-employed in a different capacity or on a part-time basis.
Where an individual makes an irrevocable election to withdraw her contributions (plus any interest thereon) from the employer's pension plan so that at the time of receiving a retiring allowance her rights to the employer's contributions have ceased to vest in her, it is our view that the employer's contributions under the plan will not be considered to have vested in her for the purposes of clause 60(j.1)(ii)(B) of the Income Tax Act. Otherwise, it will be a question of fact as to whether or not an employer's contributions under a pension plan have vested in the individual at the time a retiring allowance is paid.
Our comments are an expression of opinion only and are not binding on the Department as explained in paragraph 21 of Information Circular 70- 6R2. We trust, however, that they are of assistance.
The minimum fee submitted with your request will be returned separately.
Yours truly,
for DirectorFinancial Industries DivisionRulings 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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