18 May 1990 Income Tax Severed Letter ACC9112 - Canada-U.K. Income Tax Convention on Pension Income

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.

HBW 4125-U
                                                  JIM WILSON
                                                  (613) 957-2063
May 18, 1990

Dear

We are writing in reply to your letter dated May 4, 1990, concerning the tax treatment of certain pension income upon emigration to the United Kingdom.

Registered retirement income fund ("R.R.I.F.") payments, private pension plan benefits and social security benefits (i.e. Old Age Security ("O.A.S.") and Canada Pension Plan ("C.P.P.") meet the definition of pension under paragraph 3, Article XVII of the Canada-United Kingdom Income Tax Convention. Accordingly, pursuant to paragraph 1 of Article XVII, these benefits are only taxable in the country of residence (i.e. in your father's case, the United Kingdom).

With respect to your queries on R.R.I.F. payments, the term "pension" as used in the Convention includes any payment under a pension or retirement plan (excluding withdrawals in settlement of all future entitlements). As the amount of the withdrawals depends on the arrangement between the carrier and the annuitant, the fact that it exceeds the minimum amount (as defined in paragraph 146.3(1)(b.1) of the Income Tax Act) has no bearing on its treatment under the Convention.

In addition to the Convention, O.A.S. and C.P.P. benefits paid to a non-resident of Canada are not subject to Part XIII withholding tax pursuant to subparagraphs 212(1)(h)(i) and (ii) of the Income Tax Act.

In the event Bill C-28 receives Royal Assent, as presently worded, we are of the opinion that Part I.2 Tax (i.e. the clawback provision) does not apply to non-residents in respect of O.A.S. benefits received. Regardless, Part I.2 tax would qualify as tax which is subject to the Convention (Article II). Since O.A.S. benefits are pensions (see above), the United Kingdom would have exclusive right to tax.

We trust you will find this to your satisfaction.

Yours sincerely,

Christine Savage Acting Director Provincial and International Relations Division

JW/jb no2-43 File copy Sequence file Author's copy Reading file Access to Info(2)