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:
Deductibility of past service contributions for teachers. 147.2(5) and what happens to the contribution limit in 1995 when the special porvision is finished.
Position TAKEN:
The teacher is subject to the provisions of 147.2(c) which would be the provision they would have originally been subject to.
Reasons FOR POSITION TAKEN:
The reading of the Act and technical notes when the law was changed.
XXXXXXXXXX 5-942532
October 21, 1994
Dear Sir:
Re: Deductibility of Teachers' Past Service Contributions
This is in reply to your letter of September 21, 1994 requesting our opinion regarding how much of a past service pension payment is deductible in 1995 and forward. The situation given in your letter appears to be an actual fact situation and as noted in Information Circular 70-6R2 we do not express opinions on specific proposed transactions other than as a reply to an advance income tax ruling request. Where a completed transaction is involved, the enquiry should be addressed to the relevant District Taxation Office. Accordingly, we are only able to provide you with the following general comments.
Where contributions to a registered pension plan ("RPP") relate to pre-1990 service, the amount deductible by an individual in a particular taxation year will depend upon whether the individual "was or was not a contributor" to the RPP during the pre-1990 year. The rules on the deductibility limits pertaining to past service contributions to an RPP currently apply to everyone except teachers, and will also apply to teachers beginning with the 1995 taxation year.
Where contributions to an RPP relate to service during pre-1990 taxation years and the individual was a contributor to his/her RPP in those years, the amount deductible in computing income for a particular year is determined pursuant to paragraph 147.2(4)(c) of the Act. Accordingly, where a teacher has made past service contributions that relate to pre-1990 service while the teacher was a contributor to the RPP, these contributions are subject to the deductibility limits set out in subsection 147.2(5) of the Act for the 1991 to 1994 taxation years and commencing in the 1995 taxation the teacher will subject to the limits set out in paragraph 147.2(4)(c) of the Act. The teachers to which this special rule applies are those employed by Her Majesty or an employer exempt from income tax under the Act.
We trust that the above comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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