30 November 1995 Ruling 9628723 - RETIRING ALLOWANCE PAID TO SPOUSE

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:

Can a farmer pay his spouse a retiring.

Position:

Yes. A retiring allowance can be paid with respect to each year

during which the spouse was employed.

Reasons:

Conforms to the Act. Position taken in the past.

XXXXXXXXXX 3-962872
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1996

Dear Sirs:

Re: XXXXXXXXXX
Advance Income Tax Ruling

We are writing in reply to your letter the Department received on XXXXXXXXXX, wherein you requested certain advance income tax
rulings (the "Rulings") on behalf of the above noted taxpayers.

You have advised us that to the best of your client's knowledge, none of the issues involved herein are being considered by a Tax
Services Office or Taxation Centre of Revenue Canada in connection with a tax return already filed and that none of the issues are under objection or appeal.

Facts

1. XXXXXXXXXX has operated a farming business at XXXXXXXXXX.

2. XXXXXXXXXX has been employed by XXXXXXXXXX in the farm business since XXXXXXXXXX Her duties have been all
encompassing on the XXXXXXXXXX farm and have included work with the live stock operations of the farm XXXXXXXXXX.

3. The mailing address of both XXXXXXXXXX is:

XXXXXXXXXX

and the physical location of their residence is:

XXXXXXXXXX

4. a. XXXXXXXXXX compensation from XXXXXXXXXX has been as follows:

XXXXXXXXXX

b. For the years XXXXXXXXXX inclusive, XXXXXXXXXX registration number with Revenue Canada for purposes of deductions at source was XXXXXXXXXX XXXXXXXXXX has always remitted the required Canada Pension Plan ("CPP") premiums for XXXXXXXXXX

c. In XXXXXXXXXX started to collect her Old Age Security and CPP pension. At that timeXXXXXXXXXX cancelled his registration number with Revenue Canada and ceased making remittances for and on behalf of XXXXXXXXXX

5. XXXXXXXXXX did not receive any remuneration for her employment on the farm prior to XXXXXXXXXX due to the application of former subsection 74(3) of the Income Tax Act (the "Act").

6. XXXXXXXXXX has sold all of his farm machinery at an auction held XXXXXXXXXX His farming activity is now XXXXXXXXXX.

7. XXXXXXXXXX has no entitlements under a registered pension plan or deferred profit sharing plan as a result of her employment in the farm business.

Proposed Transactions

8. XXXXXXXXXX proposes to pay XXXXXXXXXX a retiring allowance
of $XXXXXXXXXX in XXXXXXXXXX, in recognition of her
XXXXXXXXXX years of full and part-time employment.

9. XXXXXXXXXX plans to retire in XXXXXXXXXX and upon receiving
the above mentioned retiring allowance, proposes to
contribute the full $XXXXXXXXXX to a registered retirement

savings plan.

Rulings

Provided the above statement of facts and proposed transactions are accurate and constitute a complete disclosure of all the
relevant facts and the transactions are completed as proposed, we rule as follows:

A. The amount of $XXXXXXXXXX to be paid to XXXXXXXXXX will qualify as a retiring allowance as defined in subsection 248(1) of the Act and will be included in her income in the year of receipt under subparagraph 56(1)(a)(ii) of the Act.

B. The amount of $XXXXXXXXXX will be deductible by the employer in computing his income from the business of farming for the
year in which it is paid and will be considered reasonable for the purposes of section 67 of the Act.

These rulings are given subject to the general limitations and qualifications set forth in Information Circular 70-6R2 dated
September 28, 1990, as amended by Special Release dated September 30, 1992, issued by Revenue Canada Taxation, and are
binding provided the proposed transactions are completed on or before XXXXXXXXXX.

These rulings are based on the Act and the Regulations as of the date of this ruling letter without taking into account any future amendments thereto, whether currently proposed or not.

Yours truly,

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