30 November 1995 Ruling 9612453 - RETIRING ALLOWANCE XXXXXXXXXX SPOUSE

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:

can XXXXXXXXXX pay retiring allowance to spouse/employee?

Position TAKEN:

Yes. A retiring allowance can be paid with respect to each year during which the spouse was employed

Reasons:

Prior rulings given. Conforms with law

XXXXXXXXXX 3-961245

Attention: XXXXXXXXXX

XXXXXXXXXX, 1996

Dear Sirs:

Re: Advance Income Tax Ruling
XXXXXXXXXX

This is in reply to your letter received on XXXXXXXXXX and your facsimile of XXXXXXXXXX, in which you requested an advance income tax ruling on behalf of the above noted taxpayers.

Facts

XXXXXXXXXX

XXXXXXXXXX has been employed by XXXXXXXXXX in the XXXXXXXXXX business XXXXXXXXXX duties have been all XXXXXXXXXX

XXXXXXXXXX compensation from XXXXXXXXXX since XXXXXXXXXX has been as follows:

XXXXXXXXXX

XXXXXXXXXX did not receive any remuneration for her employment XXXXXXXXXX due to the application of former subsection 74(3) of the Income Tax Act (the "Act").

XXXXXXXXXX did not take any maternity leave with the birth of her XXXXXXXXXX children.

XXXXXXXXXX sold all of his XXXXXXXXXX

XXXXXXXXXX will dispose of his XXXXXXXXXX

XXXXXXXXXX will retire from the XXXXXXXXXX

XXXXXXXXXX will retire from the XXXXXXXXXX

XXXXXXXXXX has no entitlements under any registered pension plans or deferred profit sharing plans as a result of her employment in the XXXXXXXXXX business.

Proposed Transactions

XXXXXXXXXX proposes to pay XXXXXXXXXX a retiring allowance of $XXXXXXXXXX in XXXXXXXXXX on or after her retirement and in recognition for her XXXXXXXXXX years of service.

XXXXXXXXXX proposes to contribute $XXXXXXXXXX of the retiring allowance to a registered retirement savings plan of which she is the annuitant.

Additional Information

To the best of your knowledge, none of the issues involved in this ruling are being considered by a District Office or Taxation Centre in connection with a tax return already filed, and none of the issues are under objection.

Rulings

Provided the above statement of facts and proposed transactions are accurate and constitute a complete disclosure of all relevant facts and provided the transactions are completed as proposed, we rule as follows:

A.The amount of $XXXXXXXXXX to be paid to XXXXXXXXXX will qualify as a retiring allowance as defined in subsection 248(1) of the Act and will be included in her income in the year of receipt under subparagraph 56(1)(a)(ii) of the Act.

B.XXXXXXXXXX will be entitled to a deduction under paragraph 60(j.1) of the Act to the extent permitted by that paragraph on the subsequent contribution of $XXXXXXXXXX of the retiring allowance to an RRSP of which she is the annuitant.

C.For the purposes of section 67 of the Act, the retiring allowance proposed will be reasonable and will be deductible in computing XXXXXXXXXX income from XXXXXXXXXX for the year in which it is paid.

These rulings are given subject to the general limitations and qualifications set forth in Information Circular 70-6R2 dated September 28, 1990, issued by Revenue Canada Taxation, and are binding provided the proposed transactions are initiated on or before XXXXXXXXXX.

Yours truly,

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