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.
Principal Issues: Whether amounts received for war-related injuries from the Netherlands are taxable.
Position: No
Reasons: The amounts received are excluded from taxation under section 81(1)(e).
XXXXXXXXXX
2011-040425
J. Nichols
July 11, 2011
Dear XXXXXXXXXX :
RE: War victim's benefit
This is in response to a letter dated April 17, 2011 wherein you requested our view whether a periodical benefit received by a taxpayer from the Netherlands in relation to injuries/illness caused by the Second World War are taxable in Canada. Our understanding of the relevant facts is as follows:
1. The Wuv ("Wet Uitkeringen Vervolgingsslachtoffers 1940-1945") (the "Wuv-Act") is the Dutch Act for Victims of Persecution 1940-1945. The Wuv-Act is executed in the Netherlands by the Sociale Verzekeringsbank (Social Insurance Bank) and the Pensioen-en Uitkeringsraad (the Pension and Benefit Board).
2. The Wuv-Act applies to victims and to widow(er)s of victims of persecution. A benefit is awarded in relation to injuries/illnesses caused by the Second World War. A benefit under the Wuv-Act can consist of reimbursement and allowances for war-related medical costs that are not covered by Dutch health insurance and can also consist of a periodical benefit.
3. The taxpayer was imprisoned at the age of 12 during the Second World War
in 1942.
4. The taxpayer has been receiving a periodical benefit under the Wuv-Act since 2010 in respect of medical issues arising on account of the imprisonment.
Our comments
Written confirmation of the tax implications inherent in particular transactions may only be provided by this Directorate where the transactions are proposed, and are the subject matter of an advance income tax ruling, submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Ruling, dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the Internet at http://www.cra-arc.gc.ca. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office, a list of which is available on the "Contact Us" page of the CRA website. We are, however, prepared to provide the following general comments.
In our view a periodic benefit received by a taxpayer from the Netherlands under the Wuv-Act is a pension that is exempt from taxation in Canada pursuant to paragraph 81(1)(e) of the Income Tax Act.
We trust our comments will be of assistance.
Yours truly,
Olli Laurikainen
Manager
International Section II
Income Tax Rulings Directorate
Legislative Policy & Regulatory Affairs Branch
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