17 July 1987 Income Tax Severed Letter

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.

VIA COURIER

July 17, 1987

Revenue Canada, Taxation Non-Resident, Business and Property Section Rulings Division 88 Metcalfe Street Room 300 Ottawa, Ontario K1B 5L7

Attention: Chief, W. R. McColm

Dear Mr. McColm:

Re: Article XXI of the Canada/U.S. Tax Convention

I am writing to seek your opinion on a matter of interpretation. My specific concern is whether an organization is within subsection 2 of Article XXI of the Canada/U.S. Tax Treaty with respect to certain assets earmarked for pension plan liabilities.

In brief the facts of this matter are as follows:

1. An insurance company entered into a contract with a company to hold pension plan assets in a separate account.

2. The insurance company in return for holding those assets agreed to be responsible for specified pension liabilities.

3. As stated above, the pension plan assets are held in a separate account and are by statute not available to the insurance company's other liabilities or the insurance company's creditors.

4. When the assumed pension plan liabilities are satisfied any remaining assets will be returned to the pension plan. Also, when assets are in excess of a certain percentage of liabilities, such excess can be transferred to the pension plan.

5. The insurance company has deductions to offset any tax and therefore is not taxable in the taxation year with respect to the separate account.

I would appreciate your response to this. matter at your earliest convenience.

Should you wish any further clarification please do not hesitate to call.

Yours very truly,

XXXX