16 October 1984 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.

October 16, 1984

Attention: Tax Treaty Division

Internal Revenue Service Foreign Operations District F.O.D.: 3 P.O. Box 19007 Washington, DC. 20036 U.S.A.

Dear Sirs:

CANADIAN - U.S. INCOME TAX CONVENTION (1980)

Will you kindly let us know whether or not you will consider paragraph 2 of Article XXI of the above treaty to be applicable to a Canadian registered retirement savings plan (RRSP).

As you are no doubt aware, an RRSP is an arrangement often governed by a trust deed, under which an individual may make tax-deductible contributions to be invested by the trustee or other administrator for the purpose of providing the contributor with a retirement income upon maturity of the plan. The contributions are based on "earned income", which is defined under the Canadian Income Tax Act to Include not only income from an employment or business but also other specified amounts such as rental income and alimony. In other words, the RRSP could provide for the payment of retirement income to someone who is neither employed nor self-employed.

As trustees of such plans, we had concluded that as the word "retirement" in the above Article is immediately followed by the words "other employee benefits", its meaning must, as a matter of interpretation, be restricted to the retirement of an employee. However, your official technical explanation of the treaty seems to reflect a somewhat broader interpretation than this.

Your guidance on this matter would be greatly appreciated.

Yours very truly,