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:
Whether "pension" as used in Article 17 of Canada-U.K. Tax Treaty includes payment under an unmatured RRSP.
Position:
No it is in settlement of all future entitlements.
Reasons:
"Pension" defined in paragraph 3 of Article to include payment under a "retirement plan" (e.g. RRSP) unless it is a payment in satisfaction of all future entitlements; a payment of any amount out of an unmatured RRSP is in full settlement of the future RRSP benefit which would have been based on that amount. Note that if a payment is a "periodic pension payment" as defined in ITCIA, then our position is that it is not in full satisfaction of all future entitlements & is therefore exempt pursuant to paragraph 1 of Article; however, a payment out of an unmatured RRSP is excluded from def. of "periodic pension payment".
XXXXXXXXXX 970538
April 24, 1997
Re: Payment out of Unmatured
Registered Retirement Savings Plan ("RRSP")
This is in reply to your facsimile transmission of February 25, 1997, in which you ask whether "pension" as used in paragraphs 1 and 3 of Article 17 of the Canada-U.K. Income Tax Convention (the "Convention") includes a payment out of an unmatured RRSP, provided it is not the final payment out of or under that RRSP.
A payment out of an RRSP is considered "a payment under a ... retirement plan" and such a payment is included in the definition of "pension" in paragraph 3 of Article 17 ("the Article") of the Convention unless it is "in settlement of all future entitlements".
It is our position that an amount received out of an unmatured RRSP is a payment in settlement of all future entitlements since that amount will not fund any future entitlement under the RRSP. Therefore, a payment out of an unmatured RRSP is not "pension" and is not exempt from Canadian non-resident withholding taxes pursuant to paragraph 1 of the Article.
We trust our comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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