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.
Whether there is a deduction for a contribution to a foreign government pension plan.
If it is a foreign government social security type plan based on residency as opposed to employment, no deduction provided. Payments out of government plan are considered pension or superannuation benefits and taxable in accordance with subparagraph 56(1)(a)(i) of the Act; Article 17 of treaty provides that the payments are taxable in the country of residence if they are "pension" which is defined to include payments made under social security legislation.
Calgary T.S.O. - Alberta Institute
of Chartered Accountants
A Canadian resident previously resided in the United Kingdom. While resident in the U.K. the individual started to accrue benefits under a United Kingdom government pension plan which benefits were not related to the individual's employment. However, the individual only resided in the United Kingdom for 85 percent of the time required to qualify for a United Kingdom government pension. As a result the individual is not entitled to a pension from the government plan.
The individual can make up the required time through a cash payment of approximately $15,000 to the United Kingdom government. Once the payment is made, the individual will be eligible for a full pension payment.
Would Revenue Canada please comment on the deductibility or non-deductibility of the $15,000 payment?
There is no provision in the Act which permits a deduction for contributions made to a foreign government pension plan. We also confirm that an amount paid out of this government pension plan is fully taxable to a Canadian resident recipient pursuant to subparagraph 56(1)(a)(i) of the Act, no prohibition against such taxation being provided by Article 17 of the Canada-United Kingdom Income Tax Convention.
May 15, 1996
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