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: Is it appropriate that the term “earned income” used in the Act be defined differently than a similar term used in Employment Insurance legislation?
Position: Yes.
Reasons: The terms are similar but the term “earned income” is defined for tax purposes while the similar term used in the EI legislation is defined for purposes of that legislation. We must conclude that the different classifications are therefore not inconsistent and are warranted.
Signed on March 1, 1999
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Herb Dhaliwal, Minister of National Revenue, has asked me to reply to your letter of January 5, 1999, concerning the treatment of pension income for income tax purposes and for employment insurance purposes.
I agree that the different treatment of pension income under the Income Tax Act and the Employment Insurance Act may appear inconsistent because the terms “earned income” and “earnings” are almost identical. However, the term “earned income” as it is used in the Income Tax Act is a defined term that does not include pension income. The legislation providing for the accumulation of retirement savings was not designed to allow contributions to a registered retirement savings plan (RRSP) in respect of retirement income (that is pension income), but only in respect of income earned prior to retirement. Accordingly pension income cannot be included when calculating the limit on contributions to an RRSP.
The classification of pension income as earnings for employment insurance purposes is a separate issue. It is my understanding that the categorization of amounts as earnings for employment insurance purposes precludes the ability to receive employment insurance for the period during which these earnings are received. This purpose is separate and distinct from the classification of pension income for tax purposes and thus is not inconsistent.
I trust this information will be of assistance.
Yours sincerely,
Bill McCloskey
Assistant Deputy Minister
Policy and Legislation Branch
Wayne Harding
957-9769
990172
February 9, 1999
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