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:
1.Must an officer of a corporation resign the office before a retiring allowance can be paid?
2. Will the appointment of a related party as an officer in place of the retiring officer be acceptable.
Position:
1. Yes.
2. Yes but this is only one factor.
Reasons:
The definition of retiring allowance requires the retirement from, or loss of, an office or employment.
XXXXXXXXXX 971043
Attention: XXXXXXXXXX
May 1, 1997
Dear Sirs:
Re: Retiring Allowances
This is in reply to your letter of March 26, 1997, addressed to our Calgary Tax Services Office, in respect of the payment of retiring allowances to officers and directors of a corporation. Your letter was referred to our Directorate for reply.
From the information provided in your letter it appears your enquiry relates to a specific factual situation. Written confirmations of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R3, dated December 30, 1996. Accordingly, we can not address the specific situation detailed in your letter at this time. However we can provide the following general comments.
It is the Department's position that retiring allowances can not be paid to officers of a corporation until they have resigned their offices. Furthermore, for the purposes of paying a retiring allowance, we generally accept that the directors of a corporation may appoint parties related to the retiring officers, to assume the offices of such officers. Nevertheless, it remains a question of fact whether any particular amount will be a retiring allowance in a specific situation and a position can not be determined without considering all relevant factors.
We trust these comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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