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: Calculation of retiring allowance
Position TAKEN: Stated provisions applicable
Reasons FOR POSITION: Routine
XXXXXXXXXX 5-952355
October 2, 1995
Dear XXXXXXXXXX:
Re: Transfer of Retiring Allowances to RRSPs
This is in reply to your letter of August 29, 1995 in which you requested clarification of how many years service with a former employer may be used in calculating the amount of retiring allowance that can be transferred to an RRSP.
The amount of the retiring allowance for which a deduction is available under paragraph 60(j.1) of the Income Tax Act (the "Act") is equal to $2000 times the number of calendar years before 1996 during which a person was employed with the employer paying the retiring allowance or with a former employer who is related to the payer. An additional $1500 per year for those years of employment before 1989 is available where employer contributions to a pension plan or deferred profit sharing plan had not vested in respect of those years at the time the retiring allowance is paid.
The Act provides that if a previous employer is not related to a payer, the previous employer will be considered to be related if any service with that employer is recognized in determining a person's pension benefits. However, to have this provision apply a portion of the service with the former employer must be bought back under the terms of the payer's pension. In your case, your previous employer is not related to the payer and you have not bought back any of your service under your present pension. Accordingly, your years of service with your prior employer can not be counted in determining the amount that may be transferred to an RRSP in accordance with paragraph 60(j.1) of the Act.
We regret that our reply could not be more favourable.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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