12 January 1999 External T.I. E9827675 - UK PENSION PLAN TO RRSP

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 a rollover available for an amount received from a UK pension plan to an RRSP of a Canadian resident.

Position: Question of fact.

Reasons: Subject to Article XVII of UK treaty and paragraph 56(1)(a).

XXXXXXXXXX 5-982767
Fouad Daaboul
January 12, 1999

Dear Sir:

Re: Transfer of funds received from a pension plan in the UK to an RRSP in Canada

This is in reply to your letter of October 20, 1998, wherein you requested written confirmation on the tax implications of the transfer of funds received from the Universities Superannuation Fund (a pension plan in the United Kingdom) to a registered retirement savings plan ("RRSP") in Canada.

Your question relates to a proposed transfer and a technical interpretation concerning the tax consequences can only be provided in the context of an advance income tax ruling. We may provide, however, the following general comments which are not binding on the Department.

An amount received from a foreign pension plan may be transferred to a RRSP and deducted in computing income for a year in accordance with the provisions of paragraph 60(j) of the Income Tax Act (the "Act") when the amount received is included in the recipient's income for the year under the provisions of paragraph 56(1)(a) of the Act.

An amount received from a foreign superannuation fund or plan is generally considered to be received from an employee benefit plan for Canadian income tax purposes and is taxable under subparagraph 56(1)(a)(i) of the Act where the amount is attributable to services rendered while the recipient was not resident in Canada.

A deduction is available under paragraph 60(j) of the Act for the portion of a superannuation or pension benefit received out of a foreign pension plan that is contributed to a RRSP (in the year or within 60 days after the end of the year) provided that:

a) the benefit payment is not exempt from Canadian tax by reason of subparagraph 110(1)(f)(i) of the Act (under the Canada - U.K. Income Tax Convention (1978), a pension payment, which includes a payment out of a superannuation or pension plan according to Article XVII(3), arising in the U.K. and paid to a Canadian resident is taxable in Canada pursuant to Article XVII(1)),

b) the benefit is not part of a series of periodic payments,

c) the benefit is attributable to services rendered by the recipient or his spouse in a period throughout which such person was not resident in Canada, and

d) the amount is designated by the taxpayer in the taxpayer’s return of income under Part I of the Act for the year.

We trust our comments will be of assistance to you.

Yours truly,

Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings
and Interpretations Directorate
Policy and Legislation Branch