18 October 1993 External T.I. 9327495 F - Reemployment After Retiring Allowance

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:  XXXXXXXXXX

This is in reply to your letter of September 21, 1993, in which you request a ruling with respect to the re-employment of XXXXXXXXXX and the effect of the re-employment on the characterization of an amount received by XXXXXXXXXX under a special retirement incentive scheme.

Your request relates to a past factual situation (i.e. the retirement) and we are unable to provide an advance income tax ruling on such matters. We can, however, provide the following general comments.

An amount received as a retiring allowance may be transferred on a tax- deferred basis to the recipient's registered retirement savings plan subject to certain monetary limits in accordance with paragraph 60(j.1) of the Income Tax Act (the "Act"). The term "retiring allowance" is defined in subsection 248(1) of the Act to include an amount received upon or after retirement of a taxpayer from an office or employment in recognition of his long service.

It is a question of fact whether someone has retired or not but the Department takes the position that if an employee is rehired shortly after leaving an office or employment, the employee has not retired if, at the time the employee "retired" it was foreseen that the employee would be rehired by his former employer or an affiliate. Accordingly, an amount received by the employee on account of his "retirement" would not be considered a retiring allowance.

Where, however, a long-term employee has retired without any assurance at the time of retirement of being rehired by his former employer, and receives an amount from his employer in recognition of long service, such an amount would be considered a retiring allowance regardless of the fact that the employee might be rehired at a later date when circumstances have changed.

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

Yours truly,

for DirectorFinancial Industries DivisionRulings Directorate