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.
R.B. Day (613) 957-2136
JAN 22 1987
Dear Ms Martin:
We are writing in response to your letter of December 18, 1986, wherein you requested our views regarding which taxation year retiring allowances will be considered to have been received for T4A reporting purposes.
Our understanding of the facts in this case is as follows:
Retiring employees receive a retiring allowance in accordance with XXXX policy; the retiring allowance is calculated by reference to the number of years of employment.
Employees have the option of buying back pensionable service and elected to do so. The payment for the buy-back is the retiring allowance, which is transferred directly to the XXXX Pension Fund under paragraph 60(j.1) of the Income Tax Act (the "Act").
The employees start receiving pension income in January 1986.
The processing of any particular payment (i.e. transfer to the Pension Fund) was done in January, 1986.
A "retiring allowance" is defined in subsection 248(1) of the Act as "an amount ... received upon or after retirement of a taxpayer from an office or employment ...".
Since the amounts were not paid into the pension fund until January, 1986, the amounts have not been received by the retired employees until that time.
As a consequence, it is our opinion that the retiring allowances in question should be reported on 1986 T4A supplementaries and included in the income of the retired employees in the 1986 taxation year. A deduction pursuant to paragraph 60(j.1) of the Act may then be claimed by these individuals for the amount of the retiring allowance that was transferred to the pension fund.
Yours truly
for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
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