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.
This is in reply to your letter which was received in this office on June 2, 1989 concerning the treatment Of payments under the Old Age Security Act (OAS) and the Canada (Quebec) Pension Plan (CPP/QPP) where the taxpayer makes an election under section 217 of the Income Tax Act (the "Act") and the individual is a resident of a country with which Canada has concluded a social security agreement.
It is our understanding that Canada has entered into a network of social security agreements with other countries. The purpose of such agreements is to solve the problems created with the migration of individuals between Canada and the foreign jurisdiction by coordinating the operation of the social security programs between the two countries.
Provincial and International Relations Division have indicated that such arrangements on social security do not override the Act and would also have no effect on income tax agreements or conventions. The only tax agreement or convention which we are aware of which overrides the Act concerning social security payments is paragraph 5 of Article XVIII of the Canada-U.S. Income Tax Convention (Convention).
In the case of the United States, we have indicated that, in the calculation of taxable income of a U.S. resident under section 217 of the Act, the individual would be permitted a paragraph 110(1)(f) deduction win respect of benefits received from OAS and CPP/QPP pursuant to paragraph 5 of Article XVIII of the Convention. Since none of the other tax agreements or conventions has a similar article and the social security agreements which Canada has with all of the countries do not override the Act, it is our view that the OAS and CPP/QPP payments must be included in the calculation of the 217 election.
We trust these comments are suitable for your purposes and we are including a copy of a memorandum sent to Source Deductions dealing with OAS and CPP payments received by residents of the United States.
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© Her Majesty the Queen in Right of Canada, 1989
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© Sa Majesté la Reine du Chef du Canada, 1989
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