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.
April 25, 1984
K.B. Harding
XXXX
This is in reply to your letter of March 23 concerning the death benefit paid to
XXXX
The Canadian Income Tax Act requires the payor to withhold 23 per cent withholding tax upon the payment of either a periodic or lump-sum pension benefit or death benefit to a non-resident taxpayer. Article VI of the Canada-Ireland Income Tax Convention (Convention) limits the general rate of withholding tax to 13 per cant on any income other than income from carrying on a business in Canada or from performing duties in Canada.
Article XI of the Convention provides that any pension or annuity derived from sources within Canada by an individual who is a resident of Ireland shall be erupt from Canadian taxation. However, the Convention defines pension as periodic payments made in consideration for part services.
The lump-sum payment made to XXXX on the death of her husband does not qualify as a pension payment for purposes of the Convention, since it is not a periodic payment. The only other provision of the Convention which would have application is Article VI which would reduce the Canadian withholding rate from 25 to 15 per cent.
Since me are not certain whether or not the payment was made from a superannuation or pension fund, thereby falling within Article VI of the Convention, we have provided you with the definition of a death benefit which is also subject to taxation in Canada. It should be noted that an amount not exceeding $10,000 would be exempt from withholding tax if the benefit paid to XXXX qualifies as a "death benefit" for purposes of the Canadian Income Tax Act. In order for our Department to determine whether the payment received by XXXX is a death benefit, you should provide this Department with correspondence reflecting the nature of the payment. The payor should be able to provide you with the required details.
Enclosed is a photocopy of the appropriate articles of the Income Tax Act and the Convention. We regret our reply could not be more favourable, and we are returning the documents you submitted.
Yours sincerely,
Original Signed by P. PINKUS
P. Pinkus Director Provincial and International Relations Division
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© Her Majesty the Queen in Right of Canada, 1984
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© Sa Majesté la Reine du Chef du Canada, 1984
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