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.
XXX
This is in reply to your memorandum of July 8 concerning XXX residential status in XXX
XXX
In our opinion, the provisions of paragraph 250(1)(b) of the Income Tax Act do not apply to make XXX a deemed resident in Canada at any time in XXX. The practice set out in page 139-303 of the Assessing Guide with respect to members of the Canadian Forces on leave without pay is still in force. XXX residential status must then be determined according to the usual considerations as set out in Interpretation Bulletin IT-221.
We will comment on the various sources of income reported by XXX in his XXX Income Tax Return on the basis that he was a Swiss resident and not a resident of Canada in XXX. The vacation pay would be an amount included in income under paragraph 115(1)(a)(i) of the Act providing the pay was accumulated while he was performing his military duties in Canada. The pension benefits and retiring allowances received would be subject to subparagraph 212(1)(h) and (j) of the Act respectively. Article XVIII of the Canada-Switzerland Income Tax Convention would apply to reduce the tax on the pension benefits from 25% to 15% of the benefit. The retiring allowance would be taxable at 25% of the allowance XXX may elect under section 217 of the Act in respect to the above amounts subject to Part XIII tax.
We agree that an individual who is not a resident in Canada is not entitled to have deduction permitted by section 61 of the Act. Since XXX will not have made a deduction under section 61 in computing his income for a taxation year the annuity contract will not be an Income Averaging Annuity Contract as defined in subsection 248(1) of the Act. Accordingly, subparagraphs 56(1)(e) or 212(1)(n) of the Act would have no application. In this respect, we suggest following the procedure set out in paragraph 12 of Information Circular 72-21R.
We are returning XXX Income Tax Return.
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