31 July 1998 External T.I. 9816265 - RESIDENT OF SPAIN, U.K. PENSION

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: Could a non-resident be taxed on pension income earned out of the U.K.?

Position: No

Reasons: No taxing provision in the Act

XXXXXXXXXX 							981626
M. P. Sarazin
July 31, 1998

Dear Sir/Madam:

Re: Canadian Taxation of U.K. Pension Received by a Resident of Spain

This is in response to your facsimiles dated June 20 and July 27, 1998, wherein you ask whether U.K. pension payments received by a resident of Spain would be subject to income tax in Canada.

Under the Income Tax Act (Canada) (the “Act”), a resident of Canada is subject to income tax on his or her world income and a non-resident of Canada is subject to income tax on certain amounts. Generally, a non-resident is subject to tax on his or her Canadian employment income, income earned from a business carried on in Canada and income from the disposition of taxable Canadian property. Where a person resident in Canada makes certain payments to non-residents, the payments may be subjected to a 25% withholding tax under Part XIII of the Act. The payments that are subject to Part XIII withholding taxes include interest, rent, registered retirement savings plan payments, pension benefits, annuity payments, etc...

The determination of whether an individual is a resident of Canada is a question of fact.

Where an individual is, in fact, not a resident of Canada, the U.K. pension income received by the individual would not be subject to Canadian income taxes.

We trust the above comments will be of assistance to you.

Yours truly,

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