18 July 1995 External T.I. 9515055 - RETIRING ALLOWANCE RELATED EMPLOYER

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:

	Retiring allowance rollover per 60(j.1) and service with 	related employer.

Position TAKEN:

Include years with a related employer but reduce total amount that can be rolled by amount from related employers that was previously deducted.

Reasons FOR POSITION TAKEN:

Legislation

		5-951505
XXXXXXXXXX		D. Duff

July 18, 1995

Dear XXXXXXXXXX:

This is in reply to your letter of June 6, 1995, addressed to Ms Jane Stalker of this Directorate, regarding the transfer of a retiring allowance to a registered retirement savings plan ("RRSP").

Although questions regarding the income tax treatment of proposed transactions should be submitted in the form of a request for an advance income tax ruling, we can make the following general comments. Retiring allowances are to be included in income in the year of receipt and a deduction can be taken to the extent that it is transferred to an RRSP as permitted under paragraph 60(j.1) of the Income Tax Act ("Act").

Paragraph 60(j.1) of the Act limits the amount of a retiring allowance that can be transferred to $2,000 times the number of calendar years during which a person was employed with the employer paying the retiring allowance or a related employer. This amount must be reduced by amounts of retiring allowances from related employers that were previously deducted pursuant to this provision. It is our position that the Canadian military is related to the federal public service.

For further information regarding this topic we refer you to paragraph 12 of Interpretation Bulletin IT-337R2 which we have enclosed for your convenience.

We trust this information will be useful.

Yours truly,

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

enclosures