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 years of service with a previous employer who was previously related to the current employer can be counted for purposes of determining the eligible amount of a retiring allowance under 60(j.1).
Position:
Provided our position that the points of time to determine related status is time at which retiring allowance is paid by the employer or time at which employee leaves previous employer to work for current employer.
Reasons:
Wording of legislation and interpretation that employment continues when one goes to work for a related person.
973344
XXXXXXXXXX Fouad Daaboul
Attention: XXXXXXXXXX
January 27, 1998
Dear Sirs:
Re: Paragraph 60(j.1) of the Income Tax Act ("Act")
This is in reply to your letter of December 10, 1997, in which you ask us to confirm the number of years of employment which may used in the calculation under the above-noted provision. Your question relates to a proposed transaction and to specific taxpayers and should be the subject of an advance income tax ruling. However, we can provide the following general comments.
Subparagraph 60(j.1)(ii) of the Act provides that the amount of a retiring allowance eligible for a deduction upon a transfer to a registered retirement savings plan is calculated by reference to the number of years of employment with the current employer and with "a person related to the employer". For this purposes it is our position that the employers should be related persons by virtue of paragraph 60(j.1)(iv) or subsection 251(2) of the Act, either at the time of termination of a previous employment or the time at which the retiring allowance is being paid.
Generally a corporation formed on an amalgamation (as described in subsection 87(1) of the Act) of two corporations would be considered to continue each predecessor corporation's business for the purposes of subparagraph 60(j.1)(iv) of the Act.
The foregoing comments are an expression of opinion only and are not binding on the Department, however, we trust they 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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