2 March 1981 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.

March 2, 1981

Assessing Division

Non-Corporate Rulings Division N.M. Sheerin

Mr. D. Young Enquiries and Information, Section

Disabled Child Annuity Benefits

This is in reply to your memorandum of February 20, 1981 concerning the above benefits.

We have reviewed the matter and agree with your opinion that the benefits should be considered taxable income in the hands of the recipient.

We understand that the U.S. Railroad Retirement Act provides for the payment of annuities or pensions to retired railroad workers and to survivors of deceased railroad employees. It appears to us that the annuity being received by XXXX is a survivor's benefit, to which she is entitled by virtue of her father's employment as a railroad worker and her status as a dependent child due to permanent disability.

With regard to the comments in paragraph 3 of Interpretation Bulletin- IT-122R , we understand that disability insurance benefits received under the U.S. Social Security Act are paid under a special part of that Act and out of a separate fund created for that purpose. These payments are not pension payments, since they terminate as soon as the recipient recovers from his disability. They are in the nature of health insurance payments.

While we are sympathetic to XXXX circumstances, it is our opinion that the payments she is receiving are not disability insurance payments similar to those paid under the Social Security Act, but rather survivor pension benefits which must be included in income under subparagraph 56(1)(a)(i).

for Director Non-Corporate Rulings Division

56(1)(a)(i)