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.
Principal Issues:
Can 60(j.1) be applied when a retiring allowance is actually received, if it was taxed in a previous year.
Position TAKEN:
60(j.1) can only be applied in the year that an amount is considered to be received and taxed under 56.
Reasons FOR POSITION:
Routine application of law.
XXXXXXXXXX 5-940620
Attention: XXXXXXXXXX
April 7, 1994
Dear Sirs:
Re: Payment of Retiring Allowances
This is in reply to your letter of March 10, 1994 in which you asked for our opinion on the tax treatment of amounts paid as retiring allowances in several situations.
In your letter you referred to a letter dated September 7, 1993, written by the Department on this subject. We have reviewed that letter and we agree that it is applicable to the examples you described. In each case the retiring allowance will be taxable at the time it is paid if it is paid in accordance with the terms of an employment contract. Otherwise, the amount will be taxable at the time it is due.
If an amount is taxable when it is due, an employee will be considered to have received it at that time and subparagraph 56(1)(a)(ii) of the Income Tax Act as consolidated to June 10, 1993, (the "Act") will apply. Paragraph 60(j.1) can not be applied to a retiring allowance payment in the year it is actually received if it was previously taxed in another year when it was due.
We trust this explains the Department's position on this matter.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1994
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1994
Email this Content