20 October 1993 Internal T.I. 9325267 F - Netherland's Pensions Paid to War Victims (4093-N1)

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.

Surrey Taxation CentreRulings Directorate Assessing Division

Attention:  Pat Docking 541-10 Client Services

Pensions and Allowances Paid to War Victims

This is in response to your letter of November 4, 1991 and the follow- up fax (the "Fax") received by this Division on September 8, 1993 which provided the additional information requested by this Division on your initial request to this office.

You were concerned with XXXXXXXXXX who was in receipt of a pension which was paid by the Netherlands government as compensation for victims of war atrocities. The taxpayer was of the view that the pension in question was not taxable in Canada by virtue of paragraph 5(b) of Article 18 of the Canada-Netherlands Income Tax Convention (the "Convention"). The information initially submitted did not provide adequate information so as to permit us to determine whether or not the pension was exempt from tax in Canada by virtue of either the Convention or the Income Tax Act (the "Act").

The Fax indicates that the pension is paid by the "compensation board for victims-1940-1945" by the Netherlands government. The law under which the pension is paid is called "Wet Uitkeringen Vervolgingsslachtoffers 1940-1945".

Revenue Canada has confirmed with the Netherlands' authorities that the payment of a pension under the law set out in the immediately preceding paragraph will be exempt from tax in Canada by virtue of paragraph 81(1)(e) of the Act. However, that position only applies to 1988 and subsequent taxation years in accordance with the amendment to paragraph 81(1)(e) of the Act. Pensions paid out of the plan in taxation years prior to 1988 would be taxable in Canada.

Article 18 of the Convention (applicable to the 1987 and subsequent taxation years) and Article XVII of the previous Canada-Netherlands Income Tax Agreement (applicable to the 1954 to 1986 taxation years) provided Canada with the right to tax residents of Canada on pension payments received from the Netherlands. We also confirm that it is our position that the above pension does not fall within paragraph 5(b) of Article 18 of the Convention.

We trust the above comments are adequate for your purposes.

Yours truly,

for DirectorReorganizations and Foreign DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch