30 May 1990 Income Tax Severed Letter HBW 4125-F1 HBW 6591-F2

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-F1 HBW 6591-F2 Jim Wilson (613) 957-2063

May 30, 1990

Dear xxxxx

Re: Finnish National Old Age Pension and Front Veterans Supplement

We are writing in follow-up to our letter dated January 10, 1990 (copy attached), concerning the taxability in Canada of certain pension benefits received from Finland by a resident of Canada. We have now received a reply from the Ministry of Finance in Finland.

The Finnish National Old Age Pension does not meet the definition of "pension" or "annuity" under Article II of the Canada-Finland Income Tax Convention (1958). Accordingly, Finland has a right to tax and Canada would allow a foreign tax credit as explained in our previous letter. It is our understanding that the Front Veterans Supplement would not be subject to a Finnish withholding tax (i.e. source tax). There are currently no provisions in the Income Tax Act that would exempt the Supplement from Canadian tax.

We wrote to your Ministry of Finance to ensure that the above interpretation did not apply to all social security pensions. Their reply confirmed that finnish social security schemes can generally be broken down into two categories.
• 1) National Pensions Scheme (i.e. National Old Age Pension)
• 2) Employment pensions scheme (i.e. similar to our Canada Pension Plan).

We were both in agreement that the national pensions scheme would not meet the "pension" definition in Article II but the employment pensions scheme would.

We trust you will find this to your satisfaction.

Yours sincerely,

Christine Savage Acting Director Provincial and International Relations Division

JW/jb no4-420 File copy Sequence file Author's copy Reading file Access to Info (2).