13 February 1996 Ruling 9604493 - RETIRING ALLOWANCE XXXXXXXXXX

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.

									960449
XXXXXXXXXX							M.P. Sarazin

February 13, 1996

Dear XXXXXXXXXX:

Re: XXXXXXXXXX
Advance Income Tax Ruling 953211, dated XXXXXXXXXX

This is in reply to your letter dated January 31, 1996 wherein you requested an extension of time to complete the proposed transactions described in the above-referenced Advance Income Tax Ruling (the "Ruling Letter").

You have advised us that
XXXXXXXXXX

Provided that the proposed transactions described in the Ruling Letter are completed in the manner described therein by XXXXXXXXXX, we confirm that the rulings given in the Ruling Letter will continue to be binding on the Department in accordance with the practice outlined in Information Circular 70-6R2 dated September 28, 1990, and the Special Release thereto issued on September 30, 1992.

You have also requested an opinion regarding the amount of retiring allowance that is eligible for transfer to a registered retirement savings plan ("RRSP"). Where an individual has only received a retiring allowance from the one employer and no retirement compensation arrangement is involved, the amount that is eligible for transfer to an RRSP under paragraph 60(j.1) of the Income Tax Act (the "Act") is limited to the least of

i)such portion of the retiring allowance included in income for the year as is designated in the recipient's tax return;

ii)an amount by which the aggregate of

(A)$2,000 times the number of years during which the retiree was employed by the employer or a person related to the employer (the Amendments to the Income Tax Act and Related Statutes: Draft Legislation and Explanatory Notes issued by the Honourable Paul Martin, P.C., M.P. Minister of Finance in July 1995 excludes years of employment after 1995), and

(B)$1,500 times the number by which the number of years before 1989 described in (A) exceeds the number that can reasonably be regarded as the equivalent number of years in respect of which employer contributions to a pension fund or a deferred profit sharing plan of the employer or a person related to the employer had vested in the retiree at the time of the payment of the retiring allowance,

exceeds the aggregate of all amounts deducted under paragraph 60(j.1) in respect of retiring allowances paid by the same employer or a person related to that same employer in previous years in respect of the retiree, and

iii)the aggregate of all amounts paid by the recipient in the year or within 60 days after the end of the year as a premium under the recipient's own registered retirement savings plan other than any portion thereof that has been designated for the purposes of paragraph 60(j) or (l), in respect of a transfer of superannuation benefits or a refund of premiums under a registered retirement savings plan to the extent such amounts were not deducted in computing income for a preceding taxation year.

Under subparagraph 60(j.1)(v) of the Act, a "person related to the employer" includes any person whose business was acquired or continued by the employer.

XXXXXXXXXX

As explained in paragraph 22 if Information Circular 70-6R2, the above opinion is not binding on Revenue Canada.

Yours truly,

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