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 an amount exempt from non-resident withholding taxes under 212(1)(h)(v) retain its exemption after being transferred from the RPP to an RRSP?
Position: No
Reasons:
Paragraph 212(1)(l) applies specifically to RRSP receipts.
972843
XXXXXXXXXX M.P. Sarazin
Attention: XXXXXXXXXX
November 26, 1997
Dear Sirs:
Re: Subparagraph 212(1)(h)(v) of the Income Tax Act (the "Act")
This is in reply to your letter dated October 24, 1997, wherein you requested our views as to whether the exemption from withholding taxes under subparagraph 212(1)(h)(v) of the Act would apply to an amount received by a non-resident out of a registered retirement savings plan ("RRSP") where the amount received from the RRSP was wholly funded by a lump-sum transfer from a registered pension plan ("RPP") which would have been eligible for the exemption.
Where an amount has been transferred from an RPP to an RRSP, the amount paid out of the RRSP would be included in the recipient's income under paragraph 56(1)(h) of the Act. Where the amount is paid to a non-resident, the provisions of paragraph 212(1)(l) of the Act would apply to subject the payment to a 25% withholding tax. Consequently, pension benefits relating to the calendar years where the individual was not employed or resident in Canada that would otherwise have been exempted from the non-resident withholding taxes under subparagraph 212(1)(h)(v) of the Act would become subject to a withholding tax of 25% under paragraph 212(1)(l) of the Act when such pension entitlements are transferred to an RRSP.
We trust the above comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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