23 July 1993 Income Tax Severed Letter 9320235 - Employer Purchase of Past Pension

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.

                                                   932023
XXXXXXXXXX                                         P. Spice
                                                   (613) 957-8953

Attention: XXXXXXXXXX

July 23, 1993

Dear Sirs:

Re: Employer Purchase of Pre-1990 Past Service Pension Benefits

This is in reply to your facsimile transmission of July 16, 1993, in which you ask whether an employer contribution to a registered pension plan will be considered a taxable benefit to the employee or if it would be excluded pursuant to paragraph 6(1)(a) of the Income Tax Act (the "Act").

Your enquiry relates to an actual fact situation and we are therefore unable to answer unless you submit it in the form of an advance income tax ruling request. We can provide the following general comments, however.

Paragraph 6(1)(a) of the Act will apply to include in the employee's income from an office or employment benefits derived from past service contributions made by the employer in respect of the employee's obligations to make such contributions to the plan. The employee will be eligible for a deduction in respect of such past service contributions under and to the extent provided by paragraph 8(1)(m) of the Act.

Past service contributions made by the employer in respect of the employer's obligations to the plan in respect of the employee will not be considered a benefit to be included in the employee's income pursuant to paragraph 6(1)(a) of the Act.

It is a question of fact whether or not a payment in any particular situation is a payment by the employer or a payment by the employer at the employee's direction and this may only be determined from an analysis of the terms of the arrangement in question.

Although the foregoing comments are not binding on the Department, we trust they are helpful.

Yours truly,

for Director Financial Industries Division Rulings Directorate