12 April 1988 Income Tax Severed Letter 5-5390 - [Foreign Pension Income Canada-Italy Income Tax Convention (the "Convention")]

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.

T.B. Kuss (613)957-2128

April 12, 1988

Dear Sirs:

Re: Foreign Pension Income Canada-Italy Income Tax Convention (the "Convention")

This is in response to your letter dated January 18, 1988 regarding the above-referenced subject.

Specifically you have asked for our comments on the interaction of paragraph 2 of Article XVIII of the Convention and paragraphs 60(j) and 110(1)(f) of the Income Tax Act (the "Act").

We provide the following general comments.

As a general rule, an individual who has been resident in Canada throughout a taxation year is subject to tax in Canada on his world income for that year. Where such an individual receives Italian source pension income such income would generally be included in his income pursuant to subparagraph 56(1)(a)(i) of the Act. If this income is an amount described in subparagraph 6(1)(g)(iii) of the Act, it would be eligible for transfer to a registered retirement savings plan. Provided all requirements of paragraph 60(j) of the Act are satisfied the "amount designated" by the taxpayer would be allowed as a deduction in the computation of his income pursuant to paragraph 60(j) of the Act.

If the nature of this pension income is such that paragraph 2 of Article XVIII of the Convention has application, the individual would also be entitled to a deduction pursuant to subparagraph 110(1)(f)(i) of the Act. The deduction pursuant to paragraph 60(j) of the Act will not preclude the individual from also claiming a deduction pursuant to subparagraph 110(1)(f)(i) of the Act should paragraph 2 of Article XVIII of the Convention apply.

We hope these comments are of assistance.

Yours truly,

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