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.
March 5, 1981.
EDMONTON DISTRICT OFFICE
HEAD OFFICE NON-CORPORATE RULINGS DIVISION B.W. Dath - 995-0051
E.J. Schermann Basic Files Section
Retiring Allowances.
This is in reply to your memorandum of February 24th concerning a proposed retiring allowance for two corporate shareholder/executives.
From the information provided it appears that the shareholder/employees do not deal at arms length with the corporation. Ruling TR100 expresses our opinion on what is considered to be a reasonable retiring allowance in a non-arms length situation. In the ruling we say that a reasonable amount is not more than 21 times the employee's average annual compensation from his employment for the last five years minus the total of any amounts the employee is entitled to receive on retirement in respect of deferred profit sharing plans, registered pension plans and registered retirement savings plans. An amount in excess of that considered reasonable would be included in the taxpayer's income by virtue of 6(3).
We trust that the above will assist you in replying to the taxpayer.
for Director Non-Corporate Rulings Division
BWD/cmr
56(1)(a)(ii)
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© Her Majesty the Queen in Right of Canada, 1981
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© Sa Majesté la Reine du Chef du Canada, 1981
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