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.
MINISTER/DEPUTY MINISTER'S OFFICE 95-07509M
ADM'S OFFICE
RETURN TO 15TH FLOOR, ALBION TOWER
RULINGS DIRECTORATE
November 30, 1995
XXXXXXXXXX
Dear XXXXXXXXXX:
I am writing in response to your letter of October 6, 1995, concerning your constituent, XXXXXXXXXX and the impact that the treaty-exempt pension that he receives from Germany will have on his income tax liability.
I understand from your letter that XXXXXXXXXX receives a pension that is considered exempt from Canadian income tax under the Canada-Germany Tax Agreement Act, 1982, and he will soon be eligible to receive the Old Age Security pension. Under the Income Tax Act, foreign-source pension amounts are required to be included in calculating an individual's net income. Any income that is exempt under a tax convention or agreement between Canada and another country is then deducted from net income in computing taxable income, the amount upon which income tax is based.
An individual's net income, whether subject to tax in its entirety or not, becomes an element in determining, among other things, the amount of Old Age Security pension entitlement. The Income Tax Act states that where an individual's net income exceeds $53,215, a portion of the Old Age Security pension must be repaid in the form of a special tax. The amount that is determined as the repayment of Old Age Security benefits is allowed as a deduction in computing income for the year to ensure that the amount repaid is not subject to income tax.
Although I appreciate your constituent's suggestion, I must confirm that the deduction for payments received from exempt foreign pensions included on line 256 of the Individual Income Tax Return can only be claimed after the calculation of net income on the return.
I trust my comments will assist you in responding to XXXXXXXXXX.
Yours sincerely,
David Anderson, P.C., M.P.
J. Szeszycki
957-2135
October 27, 1995
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