15 November 1988 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.

K.B. Harding (613) 957-2129

Nov 15 1988

Dear Sirs:

Re: Treatment of U.S. Social Security Payments

This is in reply to your letter of August 10, 1988 wherein you requested our opinion on the treatment of amounts received by a resident of Canada under the U.S. Social Security Act and whether such amounts could be rolled into a RRSP.

The total amount of superannuation or pension benefits received by a resident of Canada under the U.S. social security system are included in income pursuant to subparagraph 56(1)(a)(i) of the Income Tax Act (the "Act"). However, in order to honour the commitment provided in paragraph 5 of Article XVIII of the Canada - U.S. Income Tax Convention, the recipient of such social security benefits will be permitted a deduction pursuant to subparagraph 110(1)(f)(i) of the Act equal to one-half of the total amount received as a superannuation or pension benefit under the U.S. social security system.

In order to roll such benefits into an RRSP the benefit must be an amount described in subparagraph 6(1)(g)(iii) of the Act.

It is our view that superannuation or pension benefits received by a resident of Canada under the U.S. Social Security Act would be amounts described in subparagraph 6(1)(g)(iii) of the Act provided the taxpayer's benefits were attributable to services rendered in a period during which he was not resident in Canada. If the taxpayer made contributions both in a period during which he was a resident of Canada and not a resident of Canada it would be necessary to pro rate the benefit received under the U.S. social security system to determine the portion of the payment that would be an amount described in subparagraph 6(1)(g)(iii) of the Act.

Since the deduction permitted under subparagraph 110(1)(f)(i) of the Act is a deduction in computing taxable income and not income, the individual would be permitted to roll all or any portion of the superannuation or pension benefit described in subparagraph 6(1)(g)(iii) of the Act into a RRSP.

In summary, all amounts received as a superannuation or pension benefit under the U.S. social security system, to the extent they qualify as amounts described in subparagraph 6(1)(g)(iii) of the Act, may be rolled into a RRSP even though the taxpayer may only be required to include one-half of the amounts in income for tax purposes.

We trust the comments are adequate for your purposes.

for Director

Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch