20 December 1983 Income Tax Severed Letter A-9038 - [Pensions]

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.

N. Sheerin (613) 593-7295

December 20, 1983

Dear Sir:

This is in reply to your letter of November 1, 1983, in which you asked whether pensions received as a result of your employment, payable jointly to you and your wife, would be divided between you for the purposes of calculating Canadian income tax.

Without examining the terms of your pension plans, we are unable to give you a specific answer. However, pension income received in respect of employment is generally considered to be taxable in the hands of the retired employee during his lifetime, notwithstanding that the pension is payable jointly to the employee and his spouse.

As a resident of Canada, you will be taxed on your world income. The Canada-United Kingdom Tax Convention provides that there is no withholding of tax in the U.K. on the first $10,000 ( 5,000) of pension income. If your pension exceeds this amount, tax will be withheld on the excess in the U.K. You would, of course, be entitled to claim the U.K. taxes as a foreign tax credit against the amount of Canadian tax payable in respect of this portion of your pension.

If your pension is paid out of public funds of the United Kingdom or out of the funds of any local authority in the U.K. in respect of services to the government of the U.K. or in the discharge of functions of a governmental nature, it will be taxed in the U.K. If your pension is of this type, you may wish to discuss your tax position with the Inland Revenue Commission.

We trust our reply is of assistance to you.

Yours truly,

for Director Now-Corporate Rulings Division