17 November 1994 Internal T.I. 9428877 - RETIRING ALLOWANCE TO DND EMPLOYEE

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:

1)Whether total years of employment with Armed Forces, Reserves and as civilian employee of DND may be counted for purposes of 60(j.1).

2)Whether retiring allowance received in circumstances where employee retires from Armed Forces and is called back to the Reserves XXXXXXXXXX months later.

Position TAKEN:

1) Yes

2) Yes

Reasons FOR POSITION TAKEN:

1) Only one employer (DND) for Armed Forces, Reserves and civilians of DND. See also 901503, 930068, E4M00927.

2) Facts substantiate true retirement - at time of retirement, no agreement to rehire or recall.

						November 17, 1994

	Winnipeg District Office	Head Office
J. Purda				Rulings Directorate
	Director				P. Spice
(613) 957-8953
	Attention:  Debbie Anderson
						942887

Retiring Allowance Paid to DND Employee

This is in reply to your facsimile transmission of November 9, 1994, in which you describe the employment history of an individual with the Canadian Armed Forces, the Reserves, and as a civilian employee with National Defence. You ask what amount of a retiring allowance would be eligible for deduction pursuant to paragraph 60(j.1) of the Income Tax Act (the "Act"). The facts and our opinion follow.

FACTS

XXXXXXXXXX

OPINION

It is our position that if employers are controlled by Her Majesty In Right of Canada, then the employers are related. Additionally, employment with various Federal departments is considered to be a single employment since the employer in each case would be the Treasury Board of Canada. In any event, your client was employed by a single department (DND) throughout the XXXXXXXXXX years and, thus, the full XXXXXXXXXX years counts.

In accordance with the relevant portions of the calculation in subparagraph 60(j.1)(ii) of the Act the total amount eligible for a deduction upon contribution to an RRSP is $XXXXXXXXXX (i.e., the Clause (A) amount ($2000 x XXXXXXXXXX) - the Clause (C) amount $XXXXXXXXXX).

You refer to the Department's position that no amount received will be treated as a retiring allowance if an employee is rehired by the same employer or an affiliate shortly after being terminated or retiring. See paragraph 4(b) of Interpretation Bulletin IT-337R2. A retirement or loss of employment will be considered to have occurred, however, if, at the time of the retirement or loss, there is no agreement by the employer or affiliate to employ the employee at a later time.

for Director
Financial Industries Division
Rulings Directorate
Policy and Legislation Branch