12 February 1998 External T.I. 9800475 - 110(1)(F)(III)

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 income from the Food and Agriculture Organization is taxable in Canada (the FAO is part of the United Nations).

Position:

Yes.

Reasons:

It is a "superannuation or pension benefit" as defined in subsection 248(1) of the Act. Furthermore, section 18 of Article V of the Convention on the Privileges and Immunities of the United Nations ("Convention") provides exemption from tax to those United Nations officials on the salaries and emoluments paid to them by the United Nations. We are not aware of any provision in the Convention that would exempt from Canadian tax pensions received from the United Nations. The taxation by Canada of such pensions received from the FAO would be consistent with the way the Department has treated amounts received by Canadian residents from the United Nations Joint Staff Pension Fund and the International Court of Justice.

5-980047

XXXXXXXXXX Karen Power, C.A.

February 12, 1998

Dear Sir:

Re: Pension Income from the Food and Agriculture Organization ("FAO")

We are writing in response to your letter dated December 28, 1997 in which you asked for our comments concerning the tax treatment in Canada of a pension received from the FAO.

Our Comments

Canadian residents are generally required to include in their income all amounts received as a "superannuation or pension benefit" pursuant to subparagraph 56(1)(a)(i) of the Income Tax Act (the "Act") regardless of whether those payments arise inside or outside Canada. Subsection 248(1) of the Act defines "superannuation or pension benefit" to include:

"any amount received out of or under a superannuation or pension fund or plan and, without restricting the generality of the foregoing, includes any payment made to a beneficiary under the fund or plan or to an employer or former employer of the beneficiary thereunder,

in accordance with the terms of the fund or plan,

resulting from an amendment to or modification of the fund or plan, or

resulting from the termination of the fund or plan;".

Whether pension payments received from the FAO are in the form of a lump sum payment or a periodic pension payment, or whether such payments include a return of premiums and/or an income element, such payments, in their entirety, would be required to be included in the taxpayer's income in the year they are received.

There are certain tax exemptions in Canada available to employees of certain international organizations. However, these exemptions (i.e. paragraph 81(1)(a) and subparagraph 110(1)(f)(iii) of the Act) are generally restricted to remuneration from employment and do not extend to pension income.

The Department would recognize any tax exemptions granted to the employees and officials of the FAO pursuant to the Convention on the Privileges and Immunities of the United Nations ("Convention"). However, section 18 of Article V of the Convention only provides exemption from tax to those United Nations officials on the salaries and emoluments paid to them by the United Nations. We are not aware of any provision in the Convention that would exempt from Canadian tax pensions received from the United Nations.

The taxation by Canada of such pensions received from the FAO would be consistent with the way the Department has treated amounts received by Canadian residents from the United Nations Joint Staff Pension Fund and the International Court of Justice.

As pension income from the FAO is taxable under the Act, the Department must then consider the application of an income tax convention to ensure that Canada's right to tax has not been restricted or denied by the application of that particular convention. In order to determine which income tax convention may apply, you will need to determine from which country your pension benefits arise. We have not been provided with this information, accordingly, we cannot provide any comments with respect to the application of an income tax convention. If you need further information with respect to the application of an income tax convention, please do not hesitate to contact David Senécal at (613) 957-9796.

We trust our comments will be of assistance to you.

Roberta Albert, C.A.

for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

cc. David Senécal