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.
External Affairs and International Trade Canada 125 Sussex Drive Ottawa, Ontario K1A 0G2
Attention: Denis Smith Acting Director Locally-Engaged Staff Division
Dear Sirs:
This is in reply to your letter of October 4, 1993 concerning Canadian citizens employed by the Government of Canada and locally engaged in the United States.
It is our understanding that as a result of a cutback in staff by External Affairs, a number of locally-engaged employees are being (or have been) laid off. Where such lay off occurs, the employee may receive a lump-sum payment in lieu of notice. The notice period is one month or such period as is required by the law of the country in which the post is located. For example, you cite a situation where employees in your office in San Francisco were informed in early March that the office was closing on March 31, and the majority of staff were asked to leave at the end of the business day. In this case, the notice period was 3 months and a lump-sum payment was made in lieu of such notice period. You ask us to confirm that such a lump-sum payment is a retiring allowance that can be "rolled over" to the recipient's registered retirement savings plan ("RRSP").
We agree that the lump-sum payment received by locally-engaged employees in lieu of notice qualifies as a retiring allowance that can be rolled over to the recipient's RRSP to the extent provided under paragraph 60(j.1) of the Income Tax Act.
We trust our comments are of assistance.
Yours truly,
for DirectorFinancial Industries DivisionRulings DirectorateHAA 4749-3
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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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