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:
Clarify when employer pension contributions remain vested in retiring employee
Position:
As long as any future benefits or lump sums are payable
Reasons:
Routine explanation
July 8, 1996
Winnipeg Tax Services Office Headquarters
Client Services W.C. Harding
(613) 957-8953
Attention: Debbie Anderson
7-962085
Technical News No. 7 - Your File 8981 014 55
This is in reply to your facsimile of June 7, 1996, in which you requested clarification of the Department's view on vesting of employer contributions as set out in the Income Tax Technical News No. 7 dated February 21, 1996.
On page 5 of that publication under paragraph (d) on Retiring Allowances it states:
"In our view, there is no vesting (of employer contributions) if, at the time the retiring allowance is paid, the employee is not entitled to either a pension or a lump sum amount which includes the employer contributions."
You state in your submission that it has been your practice to consider any employer contributions the employee receives at the time or in the future to be vested in the employee for the purposes of Clause 60(j.1)(ii)(B) and wish to know if this is still a valid practice.
Please be advised that, in our opinion, employer contributions would be vested in an employee at the time a retiring allowance is paid if the employee is entitled to a current or a future pension or a lump sum payment which includes the employer's contributions. Accordingly, your practice would still be valid.
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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