superannuation or pension fund or plan

See Also

Jacques v. The Queen, 2016 TCC 245

401(k) plan not a pension plan

Graham J found that a 401(k) plan before him was a savings plan rather than a superannuation or pension fund or plan, so that a payment of the balance in the fund to the Canadian beneficiary was not income in her hands. Although he also was influenced by the right of an employee under the plan to significantly vary the amount contributed (from nil to 50% of his or her compensation), and to make early withdrawals, what influenced him the most was that generally distributions out of the Plan were to be made in a single lump sum payment. This did not satisfy the test in Woods that:

A superannuation or pension fund or plan is an arrangement which provides for payment of regular post-retirement income to employees… .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Superannuation or Pension Benefit 401(k) plan a savings plan rather than superannuation or pension plan 250

Administrative Policy

12 April 2018 External T.I. 2016-0640651E5 F - Swiss Pension

Swiss vested benefits policy was a “superannuation or pension fund or plan”

The Swiss employer of the taxpayer and the taxpayer had contributed regularly to the employer’s “second pillar” occupational pension plan. When the taxpayer migrated to Canada, the Swiss legislation required that the accumulated funds in the plan be transferred to a vested benefits account or policy, with the taxpayer opting for the latter (the "Policy"). Like the plan, the purpose of the Policy is to pay old-age benefits from a predetermined age. Upon the taxpayer’s return to Switzerland, the Swiss legislation required that the funds accumulated in the Policy be returned to the second pillar pension plan of the taxpayer’s Swiss employer. Since the taxpayer has not reached retirement age, no distributions from the plan or the Policy have been received. Was there an inclusion in the taxpayer’s income during the Policy years? CRA responded:

[A] plan will be considered a superannuation or pension fund or plan where amounts have been promised or contributed to the fund or plan by or on behalf of an employer or a former employer for services rendered by the employee to provide the employee with an annuity or other periodic payment at the time of retirement.

Amounts received by the beneficiary of a superannuation or pension fund or plan generally constitute superannuation or pension benefits and are only taxed in the year of payment, pursuant to paragraph 56(1)(a).

…[I]t appears … that the Policy could qualify as a superannuation or pension fund or plan.

In [such] event … the income derived from it during a period of Canadian residence of the beneficiary should not be included in the calculation of his or her income to the extent that that it was not received by the beneficiary.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(a) - Subparagraph 56(1)(a)(i) a Canadian resident was not subject to Canadian tax on income accruing in a Swiss vested benefits policy 153

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