10 October 1989 Income Tax Severed Letter ACC8642 F - Pensions Received from Britain While Residing in Canada

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.

October 10, 1989

19(1)

We are writing in regards to your letter of August 2, 1989, concerning the tax treatment of pensions upon immigration to Canada.  Pursuant to Article XVII of the Canada-United Kingdom Income Tax Convention, pensions received from Britain while a resident of Canada will be taxable only in Canada.

Under the Canadian tax system, residents of Canada are liable for tax on their taxable income.  Taxable income generally includes the person's overall income (ie. including income from employment, business, investments, pensions, etc.) from both domestic and foreign sources.  The applicable federal and provincial tax rates progress as taxable income increases.  In this regard, we have enclosed a 1988 General Tax Guide and Return for Residents of British Columbia which will allow you to determine what your 1988 federal and provincial taxes would have been.  Since the rates of tax in the other provinces are relatively similar, the British Columbia guide should provide a close approximation.

The following comments may be useful when calculating taxes payable.

1.     Like all other taxpayers, pensioners may deduct from taxes payable a basic personal credit of $1020.00.  Those aged 65 or over may claim an additional credit of $550.00.

2.     A taxpayer may also claim a credit for his spouse of $850.00. If however, the spouse's income is in excess of $500.00, the $850.00 must be reduced by 17% of the excess.  If the spouse is 65 or over, the taxpayer may be entitled to claim all or part of the spouse 5 age credit, depending on the spouse's income.  We should point out that your spouse's net income will include her pension income.

3.     A taxpayer may also be entitled to a disability credit and all or part of his spouse's disability credit.  This credit of $550.00 is available to persons who have a severe and prolonged mental or physical impairment.

4.     Person's aged 60 or over may be entitled to a pension income credit of up to $170.00.  The exact amount depends on the person's age and circumstances and the amount of qualifying pension income received.  In this regard, your pension income from Britain would be eligible so long as it is received from a pension plan or fund as a life annuity.

5.     Pension income is taxed in the year received.

6.     The family is not taxed as a unit; individual members are taxed separately depending on their own income.  There are no joint returns for husband and wife.

With respect to your last paragraph concerning your eligibility for Canadian pensions, we have the following comments:

1.     Canada's social security pension programs are the Canada Pension Plan and the Old Age Security Act.

2.     The Canada Pension Plan is a contributory plan that would only provide benefits to you if you join the Canadian work force and make contributions to the Plan.

3.     The Old Age Security Pension program is non-contributory.  However, you must be a resident in Canada for a minimum of 10 years before you are eligible for benefits.  For further information on this program, please write to Income Security Programs, Old Age Security Section, P.O. Box 5100, Station D, Scarborough, Ontario M1R 5C8.

We trust you will find the above information to your satisfaction.  We have enclosed some additional publications that may be of interest to you.  If we can be of further assistance, please do not hesitate to contact us.

Your sincerely,

C. Savage A/DirectorProvincial and International Relations Division

Enclosures

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