4 April 1995 External T.I. 9500905 - 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.

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:

Whether years of service with a former employer can be counted as eligible service for the purpose of 60(j.1).

Position TAKEN:

None

Reasons FOR POSITION TAKEN:

Not enough facts to answer question properly

		5-950090
XXXXXXXXXX		M. Shea-DesRosiers

Attention: XXXXXXXXXX

April 4, 1995

Dear Sirs:

Re: Retiring Allowance - person related to the employer

This is in reply to your letter of January 4, 1995 concerning the above-mentioned subject. We apologize for the delay in replying to your letter.

You enquire as to whether individuals, who are presently employed by a partnership and were previously employed by a corporation that is one of the members of the partnership, and are to receive, upon their termination, a retiring allowance from the partnership, can count the years of service with the previous employer as eligible service for the purposes of paragraph 60(j.1) of the Income Tax Act (the "Act").

As you mention, your enquiry relates to specific taxpayers involved in a proposed transaction. Written confirmation of the tax implications of proposed transaction can only be provided by this Directorate where the transactions are the subject matter of an advance income tax ruling request in the manner set out in Information Circular 70-6R2.

Before a ruling request could be considered, the following questions, among others, need to be addressed:

(i)who is the employer?

(ii)is there more than one employer?

(iii)is the partnership situated in the province of Quebec or in a common law province? This is important to determine for the answer to the question of "person related to the employer" at paragraph 60(j.1) of the Act.

(iv)explanation as to reason why employees are still participating in the former employer's pension and group benefit plans.

(v)who issues the T4s for the employees and who takes the deduction?

(vi)has the partnership recognized the employees' service with the former employer in determining their pension benefits?

(vii)is the former employer/corporation and the partnership related within the meaning of subsection 252(1) of the Act for the purposes of paragraph 60(j.1) of the Act?

In any case, we wish to advise you that we would not have been in a position to give you an opinion since we did not have enough facts to address your question in a reasonable manner.

We trust the above comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch