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:
general comments on the lack of taxation of pensions described in 81(1)(d) for disability or death in war service for Canada
Position:
not taxable
Reasons:
81(1)(d)
MINISTER/DEPUTY MINISTER'S OFFICE 97-00180M
ADM'S OFFICE
RETURN TO 15TH FLOOR, ALBION TOWER
March 12, 1997
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Jane Stewart, Minister of National Revenue, has asked me to reply to your letter of December 17, 1996, concerning war disability pensions.
You asked for a detailed response to each of six questions under the Access to Information Act. While I have tried to answer your questions as fully as possible, please note that an official request must be made in the manner set out in that Act. If you wish further information concerning requests made under that Act, please call the office of the Information Commissioner of Canada at 1-800-267-0441. For the sake of clarity, I have restated each of your questions with a response following each. I have included excerpts from the various statutes as attachments.
What is the definition of income for tax purposes?
Income, for the purposes of computing income tax, is defined in section 3 of the Income Tax Act (ITA) and is calculated with reference to Divisions A and B of that Act. The balance of the ITA contains provisions relating to taxable income, the computation of tax as well as special tax rules that apply to non-residents of Canada.
How is a non-taxable pension defined and in what legislation is the definition found?
While the ITA does not contain a definition of a non-taxable pension, section 81 of that Act sets out certain amounts that are excluded from the calculation of income for tax purposes. One of these exclusions is for pension benefits or allowances received under;
- the Pension Act,
- the Merchant Navy Veteran and Civilian War-related Benefits Act,
- the War Veterans Allowance Act,
- the regulations made under section 9 of the Aeronautics Act, and
- the Gallantry Awards Order.
In addition, a pension received because of a disability or death from a government of a country which was allied with Canada at the time of the war in which the disability or death occurred will be excluded from income as long as that country also provides relief from taxation to individuals receiving a pension under any of the above noted legislation.
Why is a war disability pension received from the Department of Veteran Affairs non-taxable?
As indicated above, paragraph 81(1)(d) of the ITA specifically excludes such pensions from income for income tax purposes.
What is the exact legislation which provides for the pensions referred to in question three as well as the associated tax laws relating to this type of pension?
I have included excerpts from the various enactments governing these pensions as well as the relevant provision of the ITA which excludes such pensions from income for tax purposes. As the departments which administer the pensions payable under the above noted legislation, the Department of Veteran Affairs, or the Department of Transport for pensions payable under the regulations to the Aeronautics Act, can provide you with any additional information you may require relating to the conditions under which these pensions are paid. I have forwarded a copy of your letter to Mr. David Nicholson, Deputy Minister of the Department of Veteran Affairs, and Ms. Margaret Bloodworth, Deputy Minister of Transport, so that they may be aware of your concerns.
Does this type of pension need to be reported when applying for unemployment insurance benefits, welfare or student loans?
Employment insurance benefits, formerly known as unemployment insurance benefits, are provided under the Employment Insurance Act, which is administered by Human Resources Development Canada. The administration of social assistance programs and loans granted under the Canada Student Loan Act is a provincial responsibility. As a result, I am unable to confirm the criteria used in providing these types of benefits. I have forwarded a copy of your letter to Mr. Mel Camp, Deputy Minister of Human Resource Development Canada, Mr. Don Wright, Deputy Minister of the Ministry of Education, Skills and Training of the Province of British Columbia, Ms. Sharon Manson Singer, Deputy Minister of the Ministry of Human Resources of the Province of British Columbia, so that they might each address your concerns relating to their area of responsibility.
Is this type of war disability pension considered to be income for tax purposes?
As indicated above, paragraph 81(1)(d) of the ITA specifically excludes such pensions from income for income tax purposes.
If you need any further assistance with the income tax aspect of your research, you may wish to contact Ms. Annemarie Humenuk, Income Tax Rulings Officer. She can be reached by telephoning 0-613-957-2134 collect or by writing to 25 Nicholas Street, 15th Floor, Albion Tower, Ottawa, Ontario, K1A 0L5.
I trust my comments will help you with your research.
Yours sincerely
Rob Wright
Enclosure
C.C. Mr. Mel Camp, Deputy Minister
Human Resources Development Canada
C.C. Mr. Don Wright, Deputy Minister
Ministry of Education, Skills and Training
Province of British Columbia
C.C. Ms. Sharon Manson Singer, Deputy Minister
Ministry of Human Resources
Province of British Columbia
C.C. Mr. David Nicholson, Deputy Minister
Department of Veteran Affairs
C.C. Ms. Margaret Bloodworth, Deputy Minister
Department of Transport
Annemarie Humenuk
957-2134
February 4, 1997
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