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:
What is the maximum termination benefit payable under subparagraph 8503(2)(h)(iii)?
Position:
2 x (current service contributions plus earnings thereon)
Reasons:
Finance confirmed from a policy standpoint and Registered Plans will interpret the provision this way.
960809
XXXXXXXXXX M.P. Sarazin
Attention: XXXXXXXXXX
May 28, 1996
Dear Sirs:
Re: Subparagraph 8503(2)(h)(iii) of the Income Tax Regulations
This is in reply to your letter of February 29, 1996, wherein you requested our comments with respect to the application of subparagraph 8503(2)(h)(iii) of the Income Tax Regulations (the "Regulations"). You have expressed the view that the provision was intended to allow for lump-sum payments on termination not to exceed an amount equal to two times the sum of the current service contributions made by the member to the plan plus the interest thereon.
We have been advised by the Department of Finance that the legislation was intended to credit a member's account with twice contributions and interest (2 x (contributions and interest)). Consequently, our Department will be administering this provision in accordance with this interpretation.
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
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