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:
Under a court judgment, a person is entitled to a share of her former spouse’s pension benefits. Is the person required to include the benefits received in her income?
Position: No
Reasons:
It is the Department’s general position that if an individual does not have ownership rights in the former spouse’s pension plan, the individual is not required to report the share of pension benefits received. In the above situation, the person did not have ownership rights in the former spouse’s pension plan.
971778
XXXXXXXXXX M. Eisner
February 11, 1998
Dear XXXXXXXXXX:
Re: Division of Pension - Marriage Breakdown
This is in reply to your letter of April 29, 1997, concerning whether you are required to report pension income for the 1996 taxation year. We apologize for the delay in replying.
You have enclosed a Judgment issued on XXXXXXXXXX by the Supreme Court of Ontario (the Judgment) in connection with a division of family assets between you and your former spouse, XXXXXXXXXX (the Individual), as a result of a breakdown of your marriage. Pursuant to the Judgment, you are entitled to a share of the Individual's retirement pension benefits when they are received by the Individual. In paragraph XXXXXXXXXX of the Judgment, a formula is set out in connection with your share of the pension benefits and indicates that your share of the benefits would be reduced by the average rate of income tax payable by the Individual for the year during which payments of pension are made to the Individual. In paragraph XXXXXXXXXX of the Judgment, provision is also made with respect to the severance of the pension rights (provided it becomes possible to sever the Individual’s pension rights) into one part for you and one part for the Individual, if you agree in writing with severance. Pursuant to our telephone conversation on January 2, 1998 (Eisner/XXXXXXXXXX), you have indicated that no severance of the pension rights has occurred.
During 1996, the Individual received pension benefits and paid your share of the benefits to you. You have asked whether you are required to include your share of the pension benefits in your income for 1996.
Based on our review of the Judgment, it would appear that your former spouse retained ownership rights in the pension plan, and was required through the formula set out in the Judgment, to pay a portion of his pension income to you as part of the marital settlement. As you did not become the owner of rights in the Individual’s pension plan, it is our view that you are not required to include in your annual income, the amounts you received in connection with the Individual’s pension rights.
We trust that our comments will be of assistance to you.
Yours truly,
John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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