17 June 1997 External T.I. 9620255 - RRIF PYAMENTS TO UK, GERMANY & MEXICO.

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 are the withholding rates for payments from a RRIF made to residents of the UK, Germany and Mexico.

Position:

If the payment constitutes a "periodic pension payment" as defined in section 5 of the Income Tax Conventions Interpretation Act, then the rates are 0%, 15% and 15%, respectively. If not a periodic pension payment, the rates are 25%.

Reasons:

Treaty rates.

                                       	962025
XXXXXXXXXX		                                  Jim Wilson

Attention: XXXXXXXXXX

June 17, 1997

Dear Sirs:

Re: Payments from a Registered Retirement Income Fund to a Non-Resident

This is in follow-up to our letter dated June 11, 1996 (our file #962026) in which we advised you that the application of Canada's income tax conventions with respect to payments received from a registered retirement income fund ("RRIF") is currently under review by the Department. We have now completed the review and can answer your enquiry with respect to what withholding rates should be applied on payments made from a RRIF to residents of the United Kingdom, Germany and Mexico.

Payments from a RRIF to a non-resident of Canada are subject to Part XIII tax in accordance with paragraph 212(1)(q) of the Income Tax Act. Where the non-resident is a resident of a country with which Canada has entered into an income tax convention, the 25% Part XIII tax may be reduced pursuant to that particular convention. In determining the reduced rate of withholding tax pursuant to an income tax convention, it will generally be necessary to determine if the payment from the RRIF constitutes a "periodic pension payment". As you are aware, the definition of a "periodic pension payment" is found in section 5 of the Income Tax Conventions Interpretation Act ("ITCIA"). Since we have already discussed this definition with you in the context of payments from a RRIF in our letter dated March 20, 1996 (our file #952696), we will not repeat it here.

If a payment from a RRIF qualifies as a "periodic pension payment" as defined in section 5 of the ITCIA, the Part XIII withholding rates for payments made to residents of the countries listed below would be as follows:

United Kingdom- nil
Germany - 15%
Mexico - 15%

If a payment from a RRIF does not qualify as a "periodic pension payment" as defined in section 5 of the ITCIA, the Part XIII withholding rates for payments made to residents of the United Kingdom, Germany and Mexico would generally be subject to tax at the general Part XIII withholding rate of 25%.

We trust you will find the above comments of some assistance.

Yours truly,

for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch