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 a payment under a RRIF to a non-resident can be bifurcated into a periodic pension payment and a lump sum payment
Position: No apportionment allowed
Reasons: Definition of "periodic pension payment" in the Income Tax Conventions Interpretation Act
XXXXXXXXXX 2007-024899
Ross Kauffman
July 2, 2010
Dear XXXXXXXXXX :
Re: Lump Sum Pension Payment
In your email, you asked us whether we would consider a portion of a lump sum payment under a registered retirement income fund to be a periodic pension payment that is eligible to be taxed at the 15% withholding rate in subparagraph 2(a) of Article XVIII of the Canada-U.S. Tax Convention (Treaty) rather than the 25% rate applicable to a lump sum pension payment. The portion you are suggesting that would be subject to the 15% rate is the amount determined under subparagraphs (c)(i) and (ii) of the definition of "periodic pension payment" in section 5 of the Income Tax Conventions Interpretation Act (ITCIA).
Our Comments
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following general comments which we hope you will find of some assistance.
It is our view that the whole amount of a payment under a registered retirement income fund is either a lump sum payment or a periodic payment. In determining whether a payment under a registered retirement income fund is a periodic payment, paragraph (c) of the definition of "periodic pension payment" looks at whether the particular payment along with all other payments made under the fund at or before that time exceeds the total of the amount calculated under subparagraphs (i) and (ii). If the total of the payments exceeds the amount calculated then the payment is not a periodic pension payment.
We trust that our comments are of some assistance.
Yours truly,
for Director
International & Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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