Section 60

Paragraph 60(a)

Administrative Policy

14 July 1992 External T.I. 5-921248 -

Example given of calculation of deduction under s. 60(a) for the capital portion of a life annuity.

Paragraph 60(b) - Support


Broad v. Canada, 2010 DTC 5097 [at 6924], 2010 FCA 146

The taxpayer entered into a written separation agreement with his common law spouse in which he was obligated to make support payments. Several years later, they reconciled for two years, during which no payments were made. They then separated again and payments resumed.

The Court found that the support payments made after the reconciliation attempt were deductible under s. 60(b), on the basis that they were made pursuant to the original separation agreement. Neither party had considered the written agreement to have ever been cancelled. Therefore, the requirement for a written agreement under s. 56.1(4) was satisfied for the post-reconciliation payments.

Beaudry J. also noted (at para. 9) that the taxpayer's situation did not go to the mischief addressed by 56.1(4), which was that fraudulent support arrangements could more easily be alleged in the absence of a writing requirement, leading to unjust tax benefits. He also stated (at para. 10) that Parliament has demonstrated in other statutes a strong intention to encourage reconciliation.

Milliron v. Canada, 2003 DTC 5490, 2003 FCA 283 (FCA)

In February 1997 the taxpayer and his wife entered into a separation agreement in which it was agreed that in December 1997 the maintenance and support payments stipulated in the agreement "will be renegotiated to a lesser amount." In December 1997, it was agreed in a second document that the child support payments would be reduced by one-half.

The resulting child support payments made by the taxpayer were found not to be made pursuant to the February 1997 agreement given that it did not stipulate any amounts and was, at most, an agreement to renegotiate.

The Queen v. Arsenault, 96 DTC 6131 (FCA)

The taxpayer met the requirements of s. 60(b) where, notwithstanding the requirements of a separation agreement stipulating that he was to pay maintenance of $400 per month to his separated spouse and $100 per month for each of their three children, he instead provided her with monthly cheques of $690 (later $760) made payable to the landlord, which were accepted by her.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(12) 57

Ambler v. The Queen, 95 DTC 5401 (FCA)

Minutes of settlement reached between the taxpayer and his wife gave the taxpayer the option of paying his wife the lump sum of $208,000, or of making monthly payments of $3,790 for 48 months, including a 10% interest component. The payment of the monthly amounts by the taxpayer did not give rise to deductions to him under s. 60(b).

Urichuk v. The Queen, 91 DTC 5375 (FCTD), aff'd 93 DTC 5120 (FCA)

Approximately five years after entering into a written separation agreement to pay $1,500 per month for the maintenance of his wife, the taxpayer entered into a further agreement which provided for the continuance of the monthly maintenance payments and for the payment, by way of "additional maintenance" of an amount of $200,000 payable in four stipulated unequal instalments over a period of approximately 2 1/2 years. After noting that "the fact that the payments were not made precisely in accordance with the schedule set out in the agreement is not fatal to their possible characterization as maintenance" (p. 5380), Cullen J. found that the payments were non-deductible in light of evidence that the payments were not necessary in order to maintain the standard of living of the wife and that they allowed for a substantial capital accumulation over a short period, and in light of the instalments being paid over a fixed term.

Cohen v. The Queen, 91 DTC 5239 (FCTD)

In his separation agreement with his wife, the taxpayer, in addition to agreeing to pay her maintenance of $1,500 per month from 1 November 1980 to 1 November 1982 agreed to pay to her "as maintenance the sum of $25,000 in the following instalments": $10,000 on each of 1 November 1981, 1982 and 1983. The latter three payments were found to be instalments of a capital sum rather than periodic maintenance because the obligation to make them survived the parties and in light of a clause in the agreement which was interpreted as an acknowledgment that the payments were capital payments made in consideration of the renunciation of rights.

Burgess v. The Queen, 91 DTC 5076 (FCTD)

An exchange of correspondence between the solicitors of the taxpayer and his wife, although it might have constituted a written agreement, did not meet the requirements of s. 60(b). Reed J. stated (p. 5078):

"[I]n order for the payments to be deductible, not only must they be made pursuant to a written agreement but there must be a written separation agreement in effect governing the relationship of the taxpayer to his spouse."

Caston v. The Queen, 90 DTC 6297 (FCTD)

Rule 396 of Alberta Rules of Court provided that before any motion was made for interim alimony the plaintiff was to serve notice on the defendant of the amounts demanded, the defendant could give notice in writing that he submitted to pay the interim alimony, and that no order was to be "taken out" until there had been a default in payment. Payments of alimony made pursuant to these rules did not meet the requirement of being made pursuant to an order of a court or tribunal.

McKimmon v. The Queen, 90 DTC 6088 (FCA)

A decree nisi ordered the payment by the taxpayer to his spouse of (a) the sum of $130,000 (to be effected by the transfer to her of some land), and (b) the sum of $115,000, to be paid in five annual installments together with interest thereon at 10%, and with the right by the taxpayer to prepay, and with an acceleration clause in the event of default. The $115,000 was held not to be alimony (because alimony "is limited to sums payable during the currency of the marriage"), and was held not to be a periodic payment for the spouse's maintenance because most of the following criteria did not favour deductibility by the taxpayer:

  1. the length of the periods at which the payments are made ...
  2. the amount of the payments in relation to the income and living standards of both payer and recipient; [here, the payments constituted a very large proportion of the taxpayer's declared income.] ...
  3. whether the payments are to bear interest prior to their due date ...
  4. whether the amounts envisaged can be paid by anticipation at the option of the payer or can be accelerated as a penalty at the option of the recipient in the event of default ...
  5. whether the payments allow a significant degree of capital accumulation by the recipient ...
  6. whether the payments are stipulated to continue for an indefinite period or whether they are for a fixed term ...
  7. whether the agreed payments can be assigned and whether the obligation to pay survives the lifetime of either the payer or the recipient ...
  8. whether the payments purport to release the payer from any future obligations to pay maintenance."

Larivière v. The Queen, 89 DTC 5176 (FCA)

The taxpayer's decree for divorce from his spouse provided that "instead of awarding her alimony payable in monthly instalments it is better to make an order, directing the applicant to pay the respondent the total sum of $20,000 to be paid in instalments" of $10,000, $5,000 and $5,000 at yearly intervals.

The payment of $10,000 was deductible because it was apparent, from an examination of the reasons for judgment of the divorce judge, that it was intended that the three payments meet the spouse's needs for a temporary period, and were not intended to effect a capital transfer. In addition "une allocation payable periodiquement peut être d'un montant variable."

Hodson v. The Queen, 88 DTC 6001, [1988] 1 CTC 2 (FCA)

Support payments made by the taxpayer to his separated wife were not made pursuant to a written agreement or court order, and accordingly were not deductible. "The rationale for not including separated spouses involved in payments made and received pursuant to a verbal understanding is readily apparent. Such a loose and indefinite structure might well open the door to colourable and fraudulent arrangements and schemes for tax avoidance."

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Ordinary Meaning 32

Klement v. The Queen, 87 DTC 5284, [1987] 2 CTC 27 (FCTD)

$4,200 which the taxpayer paid in the year pursuant to a $13,000 lump sum maintenance award was non-deductible. The taxpayer's contention that such non-deductibility was discrimination contrary to s. 1(b) of the Canadian Bill of Rights was rejected.

Gagnon v. The Queen, 86 DTC 6179, [1986] 1 CTC 410, [1986] 1 S.C.R. 264

"[F]or an amount to be an allowance within the meaning of s. 60(b) of the Income Tax Act, the recipient must be able to dispose of it completely for his own benefit, regardless of the restrictions imposed on him as to the way in which he disposes of it and benefits from it." Amounts paid monthly by the taxpayer pursuant to a divorce decree to his former wife were deductible notwithstanding that she was obliged to apply those amounts to the payment of sums owing under a mortgage. "The duty which she had to apply these amounts to particular purposes does not affect the benefit she derived from them."

Hanlin v. The Queen, 85 DTC 5052, [1985] 1 CTC 54 (FCTD)

The taxpayer agreed in writing with his wife to pay her "for her periodic maintenance" the sum of $1,000 at the beginning of each month over a two-year period, with the exception of three months where the payments specified in the agreement were instead $18,000, $19,000 and $17,000. Dube, J. held "that all the payments, including the three larger ones, belong[ed] to a series of payments payable on a periodic basis".

The Queen v. Taylor, 84 DTC 6234, [1984] CTC 244 (FCTD)

S.252(3) was characterized as "remedial legislation permitting a party to a void or voidable marriage to deduct for income tax purposes interim alimony ordered by a court to be paid [by him]". However, unfortunately for the taxpayer, the effective date for the introduction of s. 252(3) was after the payment by him of the alimony in question.

The Queen v. Dorion, 81 DTC 5111, [1981] CTC 136 (FCTD)

A lump sum of $20,000, payable by the taxpayer to his ex-wife in 5 annual instalments had been found, in a previous civil-law decision of the Quebec Court of Appeal, to have been "'granted in full and final settlement of all claims by the former wife against the former husband under the marriage contract'". Since the consideration for the instalments thus was the waiver of the contract benefits rather than the need of the recipient, the instalments were non-deductible.

Juteau v. The Queen, 80 DTC 6218 (FCTD)

Maintenance payments made by the taxpayer to his separated wife at a time when no written separation agreement had been entered into, were non-deductible.

Feinstein v. The Queen, 79 DTC 5236, [1979] CTC 329 (FCTD)

A declaratory judgment dated January 28, 1971 required the taxpayer to pay a weekly maintenance allowance commencing September 1, 1970. The Minister did not contest the deductibility of payments made on or after the effective date of the judgment of September 1, 1970.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Tax Avoidance 40

Trottier v. Minister of National Revenue, 68 DTC 5216, [1968] CTC 324, [1968] S.C.R. 728

Under an arrangement (reflected in four documents) between the taxpayer and his wife, the taxpayer agreed to pay his wife $45,000 of which $12,000 was payable immediately and the balance was payable in monthly instalments of $350. The payments were secured by a mortgage on the taxpayer's hotel and payable irrespective whether she continued to live or assigned the amounts. This arrangement was characterized as a release by her of all her claims for an allowance in consideration for a single consideration (the mortgage for $45,000) rather than as an agreement for the payment by him to her of a periodic allowance for maintenance.

See Also

Gibson v. The Queen, 95 DTC 749 (TCC)

The taxpayer transferred his equity in a house to his former spouse in satisfaction of arrears of alimony or maintenance owing to her of $19,946. In finding that this constituted a payment of such arrears, O'Connor TCJ. stated (at p. 752) that "payment in kind, provided there has been an agreement or a binding determination of the value in money of the object given, will suffice ... . To do otherwise would seem to run counter to the definition of 'amount' in subsection 248(1)".

Lay v. The Queen, 95 DTC 272 (TCC)

A simple written separation agreement, which the taxpayer had drafted without the benefit of legal counsel, did not specifically require him and his wife to live separate and apart, stated that he would "let" his wife write cheques for specified amounts rather than placing a specific obligation on him to pay those amounts, and did not specify that the monthly amounts were payable for the maintenance of her and their children. However, Mogan TCJ. permitted the taxpayer to give oral evidence explaining the written agreement, with the result that it was found to satisfy the requirements of s. 60(b) for deductibility.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Evidence 52

Nelson v. The Queen, 94 DTC 1003 (TCC)

There was a written separation agreement when the taxpayer signed a letter from his wife solicitor setting out the terms of their existing separation. The provision in that agreement for the payment by the taxpayer of support equal to 2/3 of his net monthly earnings represented a "periodic" allowance given that the monthly amounts were capable of being fixed in accordance with the agreed-upon formula. Furthermore, the fact that the taxpayer subsequently purported to reduce the support to a flat $1,500 per month did not establish that thereafter the payments made by him were not made pursuant to the separation agreement but, instead, represented nothing more than a breach of a term of the agreement.

Blais v. MNR, 92 DTC 1497 (TCC)

A taxpayer was ordered in 1984 to retain arrears of alimentary allowance that had accumulated from March 1983 onward to be applied against an amount owing to him by his estranged wife. In finding that the alimentary allowance was not "paid" by him for purposes of s. 60(b), and was not "received" by her for purposes of s. 56(1)(b), Garon J. stated (p. 1499):

"... The verb 'pay' in the context of that paragraph means a transfer of money, a handing over of funds ... [and] the expression 'received' involves the idea of being put in possession of something."

Words and Phrases

Jaskot v. MNR, 92 DTC 1102 (TCC)

An agreement which was described as "partly written and partly oral", i.e., the solicitor for the taxpayer's former wife had written some letters indicating an agreement but the taxpayer's communications were all oral, did not satisfy the requirements of paragraph 60(b).

D'Anjou v. MNR, 92 DTC 1022 (TCC)

The taxpayer inter alia agreed in writing with his estranged wife that he would pay her $25,000 in five instalments, the first to be payable when the judgment was rendered on an interim order, the second when the decree nisi was rendered, and the balance of three instalments to be made every four months from the time the decree absolute was rendered. These payments were found to be made for the wife's maintenance and to be periodic in nature, with the result that they were deductible.

Administrative Policy

15 November 1994 Memorandum 942444 (C.T.O. "Deductibility of Maintenance Payments")

Alimony or maintenance payments that are now paid to a public trustee because the former spouse has been placed in a mental institution will continue to be deductible to the payer because under the relevant legislation (the Mental Health Act (Manitoba)), the public trustee will receive the payments on behalf of the former spouse.

10 February 1994 Memorandum 932186 (C.T.O. "Alimony and Maintenance")

An amount paid does not necessarily have to be paid periodically to be deductible as long as the allowance provided for in the order or agreement is an allowance payable on a periodic basis. Consequently, RC generally takes the position that lump-sum payments made on account of amounts that were payable on a periodic basis pursuant to a court order, but that have fallen into arrears, will be deductible.

12 January 1993 T.I. (Tax Window, No. 28, p. 6, ¶2369)

Where a spouse transfers an interest in the principal residence to the other in satisfaction of alimony payments that are in arrears, no deduction generally will be available under s. 60(b) for the transfer.

2 June 1992 T.I. 921084 (December 1992 Access Letter, p. 15, ¶C56-204)

An agreement entered into before or after marriage but before separation which sets out mutual rights and obligations that would arise following separation, does not qualify as a written separation agreement.

6 April 1992 T.I. (Tax Window, No. 18, p. 21, ¶1848)

Where one spouse pays the insurance premiums on insurance coverage acquired in order to ensure that alimony payments are made in the event of his sickness or disability, the doctrine of constructive receipt will apply to deem any benefit under the policy to have been received by him and then paid to the recipient spouse. Consequently, the payor of the premiums will be permitted to deduct the payment as alimony, and the recipient will include the payments in income.

3 March 1992 Memorandum (Tax Window, No. 17, p. 19, ¶1777)

Where a separation agreement or court order provides for the division of an individual's pension with his or her spouse, the resulting transfer of property does not qualify as a maintenance or similar payment.

4 November 1991 T.I. (Tax Window, No. 13, p. 6, ¶1586)

Where the taxpayer had purchased an annuity contract and irrevocably directed that the annuity payments be made to his former wife, who has no right to the capital element, the income element of each annuity payment will be included in the taxpayer's income, and he will be permitted to deduct each annuity payment under s. 60(b).

5 June 1990 T.I. (November 1990 Access Letter, ¶1521)

Payments by the estate of a deceased taxpayer of alimony payments that were in arrears would not be deductible under ss.60(b) or (c).

12 June 1990 Memorandum (November 1990 Access Letter, ¶1520)

A demand made under the Alberta Rules of Court signed by one spouse and consented to by notice in writing by the other spouse would not qualify as a written separation agreement because it did not contain a statement that the parties would live separate and apart. It also would not qualify as an order of a competent tribunal for purposes of s. 60(c).


Durnford, Toope, "Spousal Support in Family Law and Alimony in the Law of Taxation", Canadian Tax Journal, 1994, Vol. 42, No. 1, p. 1.

Paragraph 60(c) - Pension income reallocation


The Queen v. Kendall, 83 DTC 5134, [1983] CTC 119 (FCTD)

Payments made by the taxpayer to third parties for the benefit of his wife were (following Gagnon, 82 DTC 6318 (FCA)) not deductible.

Ahern v. The Queen, 82 DTC 6325, [1982] CTC 362 (FCTD)

Payments are not deductible if made for the maintenance of the child of a person to whom the taxpayer was never legally married.

Howard v. The Queen, 74 DTC 6607, [1974] CTC 857 (FCTD)

The B.C. Supreme Court on February 16, 1970 ordered the taxpayer to pay $200 per month to his wife commencing February 1, 1970. On October 22, 1973 the B.C. Supreme Court confirmed a recommendation of the Registrar, dated April 22, 1971, that the support be increased to $270 per month commencing April 1, 1970. Since the second judgment, on a true construction, was a judgment nunc pro tunc the taxpayer was entitled to make a deduction under what now is s. 60(c) at a rate of $270 per month commencing on April 1, 1970.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date 80

Administrative Policy

27 January 1992 Memorandum (Tax Window, No. 16, p. 4, ¶1719)

Where a taxpayer, who is required to pay maintenance to his spouse pursuant to a court order, pays a portion of the maintenance instead directly to the mortgagee of the spouse at her request, those payments will be deductible notwithstanding that the request to make them in this manner was never agreed to in writing. It is often left to the parties to work out mutually acceptable arrangements for the payment of amounts to give effect to a court order.

Paragraph 60(c.1)


Bergman v. The Queen, 94 DTC 6056 (FCA)

The Court rejected an allegation of a taxpayer, who was denied the deduction of child support that he paid after 1986 to his common-law spouse, that s. 60(c.1) was discriminatory and offensive to s. 15(1) of the Charter.

See Also

Weronski v. MNR, 91 DTC 1105 (TCC)

The fact that support payments made to a former common-law spouse must be authorized by a court order (and not merely by a written agreement as in the case of a married spouse) did not constitute discrimination as envisaged by s. 15(1) of the Charter.

Administrative Policy

21 July 1992 T.I. 921890 (March 1993 Access Letter, p. 70, ¶C56-217)

A paternity agreement that has been incorporated into a court order of the Provincial Court would constitute an "order" as envisioned by s. 60(c.1), but not a paternity agreement filed with the Provincial Court pursuant to s. 35 of the Family Law Act.

Paragraph 60(f) - Restrictive covenant — bad debt

See Also

McBurney v. The Queen, 84 DTC 6494, [1984] CTC 466 (FCTD), rev'd 85 DTC 5433, [1985] 2CTC 214 (FCA)

rev'd on other grounds, 85 DTC 5433, [1985] 2 CTC 214 (FCA)

A tuition fee was defined as "the monetary consideration (money or, money's worth of goods or services) payable to a pedagogue or school authority for enrolling a pupil or student in an instructional, training or educational lecture or course of lectures."

Words and Phrases
tuition fee

Administrative Policy

S2-F3-C1 - Payments from Employer to Employee

1.9 Where an amount in respect of a covenant (described in [s. 6(3)] is receivable by an employee at the end of the year, subsection 6(3.1) deems the amount to be received at the end of that year, if:

  • the amount receivable was not included in the employee's income as part of a salary deferral arrangement as defined in subsection 248(1); and
  • the employee agreed to the covenant more than 36 months before the end of that year.

The amount is taxed as employment income at the end of that year.

1.10 If an amount in respect of a covenant is included in the employee's income as described in ¶1.9 and the amount becomes a bad debt in a later year, the employee may claim a deduction from income under paragraph 60(f) in that later year. An amount generally becomes a bad debt if it remains unpaid after the employee has exhausted all means to collect it or where the employer has become insolvent and has no means of paying it.

Paragraph 60(i) - Premium or payment under RRSP or RRIF

Administrative Policy

18 November 2014 External T.I. 2012-0457981E5 - Restorative payment to registered plan

employer restorative payment to RRSP or RPP to compensate for tort

Employer accidentally missed contributing, to a group RRSP or defined contribution pension plan, the Employer's portion on behalf of an employee for a time period, and will now make a restorative payment to the accounts of the employee under the Plans to compensate for the lost income from the missing contributions. Does a taxable benefit result? CRA responded:

Where a payment made by an employer into a registered plan of an annuitant is reasonable compensation for an employee's financial loss and the payment is the result of a wrongdoing or tort in the administration of the plan…the payment would not be viewed as employment income to the employee. …[N]either the employer nor the employee are considered to have made a contribution or paid a premium to the registered plan as a consequence of the payment of damages and therefore, there is no corresponding deduction available under paragraph 20(1)(q) or paragraph 60(i).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(q) employer restorative payment to RRSP or RPP to compensate for tort 153
Tax Topics - Income Tax Act - Section 204.1 - Subsection 204.1(2.1) employer restorative payment to RRSP or RPP to compensate for tort 77
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) employer restorative payment to RRSP or RPP to compensate for tort 109

Paragraph 60(j) - Transfer of superannuation benefits

Administrative Policy

29 October 2018 External T.I. 2018-0750411E5 - Transfer from an IRA to a RRSP

failure to qualify for 60(j) deduction where deemed withdrawal from IRA followed by actual withdrawal

A Canadian citizen who was a U.S. long term resident under the U.S. expatriation rules was deemed for Code purposes to receive a taxable distribution of his entire interest in his IRA (the “Deemed Distribution”) immediately before his relinquishing of his green card and Canada. When he then made an actual withdrawal of those amounts (the “Withdrawal”) in order to contribute them to his RRSP, they were not subject to further U.S. income tax.

The RRSP contribution did not generate a s. 60(j) deduction. The Withdrawal did not qualify as an “eligible amount” for s. 60.01 purposes because it was the amount of the Deemed Distribution (not the Withdrawal) that was included in the Taxpayer’s income under s. 56(12) and s. 56(1)(a)(i)(C.1). Conversely, the amount of the Deemed Distribution also was not an “eligible amount” as it is not a “payment received” for the purpose of s. 60.01.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 60.01 a departing U.S. resident who has a deemed inclusion for his IRA cannot then obtain a s. 60(j) deduction for contributing actual IRA withdrawals to his RRSP 298
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(a) - Subparagraph 56(1)(a)(i) - Clause 56(1)(a)(i)(C.1) deemed withdrawal from IRA rather than subsequent actual withdrawal included in income per s. 56(12) 219

16 May 2016 External T.I. 2015-0571591E5 - Employees Provident Fund of Malaysia


In responding to a question as to whether an individual who received a lump sum payment from the Employees Provident Fund of Malaysia (“EPF”), which is administered by the Ministry of Finance Malaysia, was entitled to contribute that amount to an RRSP on a tax-deferred basis, CRA provided a general description of s. 60(j)(i).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Superannuation or Pension Benefit pension plan characteristics 160
Tax Topics - Income Tax Act - 101-110 - Section 110 - Subsection 110(1) - Paragraph 110(1)(f) - Subparagraph 110(1)(f)(i) Treaty-exempt receipts must be included in income and deducted from taxable income under s. 110(1)(f)(i) 85

2015 Ruling 2015-0572541R3 - Foreign Tax Credit on Transfer of 401(k) to RRSP

The Individual will be entitled to a deduction under paragraph 60(j)… for the contribution to his RRSP… .

See summary under s. 126(1).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) s. 60(j) deduction does not reduce foreign source income for FTC purposes 187
Tax Topics - Income Tax Act - Section 126 - Subsection 126(7) - Non-Business-Income Tax additional 10% tax on withdrawal from 401(k) plan, as income tax 111

24 September 2014 External T.I. 2014-0543091E5 - UK Personal Pension - RRSP

U.K personal pension scheme not a pension plan

The taxpayer wishes to transfer funds from a personal pension scheme (PPS) in the United Kingdom, which is a self-funded retirement plan, to a registered retirement savings plan (RRSP).

A s. 60(j)(i) transfer is not available as the PPS is not a superannuation or pension plan given the CRA policy that such a plan is one to which "contributions have been made to the plan by or on behalf of an employer of an employee in consideration for services rendered by the employee and the contributions are used to provide the employee with an annuity or a pension on or after the employee's retirement," whereas here only the taxpayer had made contributions.

A s. 60(j)(ii) transfer is not available, as to date only IRAs have been prescribed under Reg. 6803.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Superannuation or Pension Benefit U.K personal pension scheme not a pension plan 113

15 January 2013 External T.I. 2012-0439641E5 - UK pension transfer to Canada

After accruing benefits in a UK define plan while residing and being employed in the UK, the correspondent received a lump-sum payment from the plan "(which is not a part of the series of periodic pension payments and would represent a partial commutation of pension benefits) as well as a monthly payment which comes due on the individual's XXXX birthday."

After providing a summary of the parts of IT-528 relevant to the taxpayer's situation, CRA indicated that the taxpayer would probably be entitled to a s. 60(1)(j) deduction in respect of the lump-sum payment from the UK pension plan, provided that the contribution were made to the taxpayer's RRSP in the year the benefit is received (or within 60 days of year's end).


Faizal Valli, "Implications of Canadians Transferring a U.S. Retirement Plan to Canada", Taxation of Executive Compensation and Retirement, Vol. XV, No. 2, 2011, p. 930: Includes discussion of plan to transfer a 401(k) plan to an IRA, then to an RRSP.

Paragraph 60(j.1) - Transfer of retiring allowances

Administrative Policy

S2-F1-C2 - Retiring Allowances

Example of 60(j.1) retiring allowance transfer to RRSP

2.31 ...

Jacques began working at ABC Company in October 1984 and retired in June 2016. In June 2016, Jacques received a $45,000 retiring allowance in recognition of his long service and includes this amount in income. Jacques has been a member of ABC’s pension plan since October 1986. Jacques’ regular RRSP deduction limit for 2016 is $8,000.

The maximum that Jacques can contribute to his RRSP and claim a deduction under paragraph 60(j.1) is $27,000:

$2,000 x 12 full or partial years before 1996


$1,500 x 2 years before 1989 with no vested benefits


$ 3,000

Maximum deduction


During 2016, Jacques contributes $35,000 to his RRSP. Jacques is entitled to claim a deduction of $27,000 under paragraph 60(j.1). The remaining $8,000 can be deducted using Jacques’ regular RRSP deduction limit.

12 November 2014 Internal T.I. 2014-0535341I7 - Retiring Allowance transfer to RCA

no deduction for retiring allowance transferred to RCA

Where members of a registered pension plan direct their employer to transfer their retiring allowance to the RPP to purchase past service benefits and the amount eligible for deduction under s. 60(j.1) exceeds the past service benefits permitted to be purchased, the difference may be transferred to an RCA to provide benefits in excess of the benefits from the RPP. The Directorate stated:

Subject to certain conditions, the taxpayer may claim a deduction under paragraph 60(j.1) for the eligible amount of a retiring allowance transferred to the taxpayer's RPP or registered retirement savings plan. There is no provision in the Act that allows for a deduction for a retiring allowance transferred to an RCA.

15 October 2010 External T.I. 2010-0364291E5 - 60(j.1)(ii) Predecessor Employer

school board amalgamation

Generally, there is no loss of employment on a school board amalgamation. Therefore, years of service with a predecessor board may be included in calculating the amount under s. 60(j.1).

Income Tax Technical News, No. 7, 21 February 1996 (cancelled)

Employer contributions under a pension plan or deferred profit sharing plan are not considered to have vested in the retiree at the time of the payment of a retiring allowance if, at that time, the employee is not entitled to either a pension or a lump sum amount which includes the employer contributions.

24 July 1995 T.I. 951590 (C.T.O. "Partnerships under 60(j.1)")

"In the circumstances where either subparagraph 60(j.1)(iv) or (v) of the Act apply, namely where the partnership has acquired or continued a corporation's business or where the partnership's pension plan would provide benefits based on the employee's former service with a corporation, the Department will accept that that corporation is a 'person related to the employer' (i.e., the partnership) for the purposes of paragraph 60(j.1) of the Act."

1 June 1995 External T.I. 5-951189 -

S.60(j.1)(v) would apply to deem a new employer to be a related employer where the new employer has a money purchase registered pension plan, the old employer has a defined benefit registered pension plan and the employee commutes his pension with the old employer and transfers the commuted value of his pension benefits to the money purchase registered pension plan of the new employer. However, s. 60(j.1) will not apply where the new employer waives the vesting period under the registered pension plan. "The waiving of the vesting period only allows the employee to receive full entitlement to pension benefits earlier and in no way increases the amount of pension benefits to take into account years of service with the former employee, that the employee receives upon retirement."

31 May 1995 Memorandum 950887 (C.T.O. "Related Employers for Retiring Allowance")

"If any part of the service with a previous employer is recognized under the current employer's pension plan, all the years of service with the former employer will be considered service with a 'person related to the employer'."

7 March 1995 External T.I. 5-950068 -

Where termination pay is paid to an employee in lieu of the wages that would have been payable to an individual for the notice period set out in s. 57 of the Employment Standards Act (Ontario), the notice period will be included in the length of the employee's employment for purposes of the computation under s. 60(j.1)(ii)(A).

2 November 1994 External T.I. 5-942384 -

The years in which an employee was employed by a foreign subsidiary can be taken into account.

14 September 1994 Memorandum 942352 (C.T.O. "Retiring Allowance for MLA's")

"The 'employer' of the New Brunswick Legislative Assembly is the same employer of the New Brunswick Civil Servants and, therefore, all years of service as an MLA and a provincial civil servant may be aggregated."

12 September 1994 T.I. 941728 (C.T.O. "Related Employers for Retiring Allowance Transfer")

Where an individual works for Employer 1 when it is related to Employer 2, Employer 2 severs its connection with Employer 1 so that it no longer is related, and the individual quits his job with Employer 1 and obtains employment with Employer 2, the eligible amount of a retiring allowance paid by Employer 2 cannot include amounts in respect of years of employment with Employer 1 because Employer 2 was not related to Employer 1 either at the time the retiring allowance was paid or at the time the employee terminated the first employment and obtained the second employment.

4 August 1994 External T.I. 5-941631 -

Routine discussion includes an example.

28 July 1994 T.I. 941431 (C.T.O. "Retiring Allowance Transfer - Discontinuous Service")

The years of service used in the calculation of a portion of a retiring allowance that may be transferred to an RRSP under s. 60(j.1) need not be continuous.

23 March 1994 T.I. 940586 (C.T.O. "Retiring Allowance - Person Related to Employer")

Another school board will be considered to be a person related to the school board currently employing the taxpayer where both boards participate in the Ontario Municipal Employees' Retirement System.

17 June 1993 T.I. (Tax Window, No. 32, p. 19, ¶2620)

The number of years of service need not be continuous in order to be included in the calculation of the amount deductible.

15 January 1993 T.I. (Tax Window, No. 28, p. 18, ¶2378)

A taxpayer may elect under s. 60(j.1) to transfer a retiring allowance to his registered pension plan in order to buy back past service for years prior to 1990, while he was not a contributor, provided that the terms of the pension plan permit him to do so.

5 March 1992 T.I. (Tax Window, No. 17, p. 19, ¶1784)

Where an employee pays amounts into a pension plan to buy back past service years, the employer's contributions have vested in respect of each year bought back even though the employee paid the employer's required contributions for those years.

21 April 1992 T.I. (Tax Window, No. 18, p. 18, ¶1866)

Where an employee buys back years of service under a pension plan and pays the employer's shares of contributions in addition to his share, the years involved are still considered to be years in which the employer made contributions to the plan.

15 April 1992 T.I. (Tax Window, No. 18, p. 19, ¶1862)

Re effect of winding-up of pension plan on test in s. 60(j.1)(v).

7 February 1992 Memorandum (Tax Window, No. 16, p. 14, ¶1737)

Where an individual worked for Oldco for a number of years, Oldco then went out of business and was wound up and the individual then formed Newco which was in the same business as Oldco, Oldco would not be considered to be related to Newco for purposes of s. 60(j.1).

5 February 1992 T.I. (Tax Window, No. 16, p. 13, ¶1733)

Where, under a pension plan, an individual who suffered a loss of office could elect, with respect to one or more years of service prior to 1987, to receive out of the plan only his own contributions plus the related earnings, in which case the vesting of the employer's contributions were forfeited for that year, the individual could take advantage of s. 60(j.1)(ii)(B) for each of the years for which such an election is made.

17 October 1990 T.I. (Tax Window, Prelim. No. 1, p. 20, ¶1020)

Because a "pension plan" includes any pension plan whether registered or not, an employee of a Canadian corporation who is covered by a foreign-based pension plan of its U.S. parent and receives a "retiring allowance", is entitled to transfer to an RRSP only $2,000 for each year of employment for which the employer has made contributions which have vested.

26 January 1990 T.I. (June 1990 Access Letter, ¶1261)

Discussion of years credited for employment with a previous employer of the retiree.

IT-337R2 "Retiring Allowances" under "Tax Deferral"

IT-307R2 "Registered Retirement Savings Plan for Taxpayer's Spouse"

The provisions of s. 60(j.1) do not entitle a taxpayer to deduct the amounts of the type described therein that had been paid into an RRSP of his spouse.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 146 - Subsection 146(5.1) 0

ATR-8 "Transfer of Retiring Allowance to an RRSP"


Collins, "The Terminated Employee: Minimizing the Tax Bite", 1993 Conference Report, C. 31.

Paragraph 60(l) - Transfer of refund of premiums under RRSP

Administrative Policy

6 October 2017 APFF Financial Strategies and Financial Instruments Roundtable Q. 5, 2017-0707801C6 F - RRIF transfers – partition of family patrimony

transfer from deceased's RRIF to RRIF of surviving spouse in settlement of claim

A couple separated without proceeding to an official division of their assets. When Monsieur subsequently died, his will excluded Madame. She made a claim against the executor, and they then agreed in writing to transfer the property in the deceased’s RRIF to her for contribution to her RRIF. CRA indicated that the usual rules for a transfer from a deceased’s RRIF to that of his surviving spouse applied so that:

  • The rollover for a spousal RRIF-to-RRIF rollover under s. 146.3(14) on the breakdown of a marriage was not available because the transferor annuitant was dead.
  • However, if the executor and the surviving spouse made a joint designation on Form T1090, the value of the property in the deceased’s RRIF could qualify as a “designated benefit” and be excluded from the deceased’s income and included in the surviving spouse’s income.
  • The surviving spouse, in turn, would be eligible to take a deduction under s. 60(l) for the transfer of an “eligible amount” to her RRIF.
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 146.3 - Subsection 146.3(14) amount paid to surviving spouse's RRIF did not qualify under s. 146.3(14) 157
Tax Topics - Income Tax Act - Section 146.3 - Subsection 146.3(1) - Designated Benefit payment from a deceased’s RRIF to the RRIF of the surviving spouse who was excluded under the will qualified as designated benefit 328

11 July 2016 External T.I. 2015-0592681E5 F - RRIF Death of an annuitant

transfer by eligible recipient of payment out of RRIF

Where the death of an annuitant under an RRIF was followed very shortly by the death of the surviving spouse, CRA accepted that the (briefly) surviving spouse would qualify as an annuitant under the RRIF provided that the predeceased spouse had so designated the survivor by will or in the RRIF contract. The deemed inclusion of the fair market value of the fund property of the second-to-die of the two spouses could be reduced to the extent that there then was a transfer out of the fund to a financially dependent child or other eligible beneficiary (in which case, the eligible amount of the transfer was included in the transferee’s income under s. 146.3(5)(a).

Respecting this income inclusion to the eligible recipient and the ability to claim an offsetting deduction under s. 60(l) for a “Transfer Payment,” CRA stated:

Under clause 60(l)(v)(B.2), the amount of the deduction claimed by the Eligible Recipient cannot exceed the "eligible amount" of the Eligible Recipient for the year in respect of the RRIF. For the purposes of subparagraph 60(l)(v), the concept of "eligible amount" is defined in subsection 146.3(6.11) and represents, in general terms, the portion of the amount corresponding to the designated benefit less the minimum amount…under the fund for the taxation year. Thus, to qualify for this deduction, paragraph 60(l) provides that the Transfer Payment made by or on behalf of the Eligible Recipient must be made in the year or within 60 days of the end of the year in which the Eligible Recipient included a designated benefit in computing income by virtue of subsection 146.3(5).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 146.3 - Subsection 146.3(1) - Annuitant surviving spouse who has been predesignated can qualify as an RRIF annuitant even if he or she does not receive any annuity payments 243
Tax Topics - Income Tax Act - Section 146.3 - Subsection 146.3(6.2) deduction for transfer to eligible recipient by surviving spouse 277
Tax Topics - Income Tax Act - Section 146 - Subsection 146(1) - Refund of Premiums consequence of death if named as beneficiary in RRSP contract 154

23 June 2014 External T.I. 2014-0528551E5 - Transfer of refund of premium

transfer of refund of premiums to non-disabled child's RPP

Can a deceased RRSP annuitant's financially dependent child or grandchild who was not dependent on the deceased by reason of physical or mental infirmity claim a deduction under s. 60(l) for the amount of a refund of premiums under an RRSP that is included in the child's or grandchild's income in the year and transferred in the year to a pooled registered pension plan ("PRPP") or specified pension plan ("SPP"). CRA stated:

Clause 60(1)(v)(B.1)… limits the amount that may be deducted by a deceased RRSP annuitant's financially dependent child or grandchild who was not dependent on the deceased by reason of physical or mental infirmity to the amount of a refund of premiums under an RRSP that was transferred to an annuity for a fixed term not exceeding 18 years minus the child's or grandchild's age in whole years at the time the annuity is acquired. Consequently, a deduction is not available under paragraph 60(l)… when a non-infirm financially dependent child or grandchild transfers a refund of premiums to an account under a PRPP or an SPP.

11 January 2012 STEP Roundtable, 2011-0402291C6 - Subsection 248(8)-Intestacy-Transfer of Property

Where a taxpayer dies intestate, then provided the property of the deceased is distributed to the beneficiaries in accordance with the shares specified in the applicable provincial law of intestacy, such property will be considered to have been distributed as a consequence of the deceased's death per s. 248(8) even if each type of property is not distributed on a pro rata basis among the beneficiaries. For example, it would be permissible for a surviving spouse to receive, in accordance with such provincial law, all of an RRSP of the deceased that was included in the estate, in order to access the s. 60(l) rollover.

19 June 1995 T.I. 951540 (C.T.O. "Two Spouses as Beneficiaries of RRSP")

"Where an individual is the annuitant of several registered retirement savings plans ("RRSPs") and the individual is both married and living common law as described in paragraph 252(4)(a) of the Act then... the married spouse could be named as the designated beneficiary of some of the RRSPs and the common-law spouse could be named as the designated beneficiary of the remainder of the RRSPs."

88 C.R. - Q.76

RC does not have an administrative policy that would permit a continuous sheltering of the income on plan assets during the period required to effect a transfer from the RRSP of the deceased to the RRSP of his spouse.

Paragraph 60(n)

Subparagraph 60(n)(v.1)

Administrative Policy

18 June 2015 External T.I. 2015-0578071E5 F - Reimbursement of overpayment of QPIP benefits

no s. 60 deductions if non-resident

After becoming a non-resident of Canada, the taxpayer was required (in the “Repayment Year”) to repay excess benefits received by her in a previous year pursuant to the Quebec Parental Insurance Plan and included when received in her income under s. 56(1)(a)(vii)? In finding that she was not entitled to a deduction (under s. 60(n)(v.1) or otherwise), CRA stated:

[I]f a taxpayer is non-resident in the Repayment Year, the application of the Act does not generally allow the taxpayer to claim a deduction under paragraph 60(n)….

Generally, [ss. 2(3) and 115(1)] imply a computation with respect to specified sources of income, while allowing certain deductions to be claimed. In this context, subsection 4(2) provides that the deductions allowed by section 60 do not enter into the computation of the income or loss from a specific source. Subsection 4(3) does not provide any exception to this general rule…. However, we consider it appropriate to share with you the application process for a remission order….

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 4 - Subsection 4(2) s. 60 deduction denied for repayment of previous income inclusion 130
Tax Topics - Other Legislation/Constitution - Federal - Financial Administration Act - Section 23 - Subsection 23(2) general criteria for granting remission 190

Paragraph 60(o) - Legal Expenses

See Also

Ridout v. The Queen, 2013 DTC 1209 [at 1115], 2013 TCC 260 (Informal Procedure)

credit claim not an appeal

Woods J found that the taxpayer could not deduct legal fees relating to the preparation of claims for a disability tax credit. A disability tax credit claim is not an appeal, and therefore does not fit within s. 60(o)(i).

Administrative Policy

21 January 2016 CPA Personal Income Tax Roundtable Q. 7, 2016-0625731C6 F - Fees related to a voluntary disclosure

professional fees incurred after a voluntary disclosure is accepted commence to be deductible

Does CRA allow deductibility of professional fees incurred by the taxpayer to defend its claim from the time it was informed by the CRA that its income or tax for a taxation year will be revised under the voluntary disclosure program ("VDP")? CRA stated (TI translation):

The CRA considers that expenses of making a voluntary disclosure are not deductible under paragraph 60(o)… and would generally not be made or incurred by the taxpayer for the purpose of gaining or producing income from a business or property. …

[O]nce the CRA advises the taxpayer that it accepts the voluntary disclosure and that it will revise the income or the tax payable of the latter under the VDP, we generally will allow the deduction, under paragraph 60(o), for professional fees incurred from that time onwards by the taxpayer in advancing its claims respecting the revision.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(cc) VDP fees deductible if re business 74

S4-F2-C1 - Deductibility of Fines and Penalties

Fees incurred to object to or appeal an assessment of penalties

1.39 Paragraph 60(o) provides a deduction for (among other things) certain fees or expenses paid in the year to prepare, institute or prosecute an objection to, or an appeal relating to:

  • an assessment of tax, interest or penalties under:
    • the Act; or
    • an act of a province that imposes a tax similar to the tax imposed under the Act; or
  • an assessment of any income tax deductible by the taxpayer under section 126 of the Act (concerning foreign tax credits) or any interest or penalty relating to such assessment.

22 May 2014 Ponoka Liason Meeting Roundtable, 2014-0528451C6 - Cost of Making Voluntary Disclosure

costs of voluntary disclosure incurred by business

This was a follow-up query on 2012-0437831E5, indicating that voluntary disclosure costs were not deductible, as they were neither incurred to earn income from business or property, nor in relation to an objection or appeal. After confirming this position, CRA stated:

However, where a taxpayer earns income from a business, the cost of making a voluntary disclosure relating to that business may be deductible as a cost of representation pursuant to paragraph 20(1)(cc).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Legal and other Professional Fees costs of voluntary disclosure incurred by business 74
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(cc) costs of voluntary disclosure incurred by business 74

17 October 2014 External T.I. 2014-0532121E5 F - Frais professionnels - Divulgation volontaire

fees become deductible from CRA indicating it will reassess

Are legal or accounting expenses incurred respecting a voluntary disclosure deductible? After indicating that the deduction of such expenses generally would be restricted by s. 18(1)(a), CRA stated (TaxInterpretations translation):

[P]aragraph 60(o) becomes applicable…from the moment that the situation qualifies as an objection or appeal… . [A] taxpayer can deduct professional fees from the moment when he or she is informed by the CRA that his or her income or tax for a taxation year will be revised.

...Consequently, the professional fees which are deductible by virtue of paragraph 60(o) must be claimed in the year when they are payable.

See summary under s. 18(1)(a) – legal fees.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Legal and other Professional Fees voluntary disclosure fees generally non-deductible 121

25 April 2014 Internal T.I. 2014-0524191I7 - Deductibility of legal fees

legal costs and adverse cost award of unsuccessful TCC appeal

The taxpayer unsuccessfully appealed the disallowance of medical expense tax credits to the Tax Court. CRA stated:

the amounts deductible under subparagraph 60(o)(i) would generally include the legal fees paid by the appellant to his own legal representative as well as those legal fees required to be paid by the appellant to the respondent's legal representative as a consequence of costs being awarded by the TCC to the respondent.

5 December 2012 Internal T.I. 2012-0451331I7 F - Déductibilité de frais juridiques

sales tax disputes not covered; expenses start running from audit review

The taxpayer incurred fees in making representations after being informed that amounts were owing for unpaid income taxes, sales tax and GST (perhaps by an insolvent corporation of which he was a shareholder). No assessment was issued.

In finding that the fees were not deductible under s. 60(o), CRA stated (TaxInterpretations translation):

[P]aragraph 60(o) cannot apply in cases respecting sales taxes. That was the CRA position in Interpretation 2004-0101351I7.

...[P]aragraph 60(o) applies to expenses incurred in the course of negotiations with auditors from the time that the taxpayer was informed that the taxpayer was the subject of an audit review or reassessment (Interpretation Bulletin IT-99R5, paragraph 7).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Legal and other Professional Fees legal expenses incurred to minimize responsibility under guarantee were not connected to operations which were necessary or incidental to the earning of income 206

5 June 2012 External T.I. 2012-0437831E5 - Professional Fees

voluntary disclosure costs not covered

"[A]ny legal or accounting fees or expenses relating to the filing of a voluntary disclosure are not deductible by the taxpayer under subsection 60(o) of the Act as they do not relate to an objection or an appeal."

26 August 1992 Memorandum 921728 (April 1993 Access Letter, p. 139, ¶C56-222)

Legal and accounting fees respecting a voluntary disclosure are not deductible under s. 60(o). Where a taxpayer had informed the Department that excessive RRSP contributions had been made, only legal and accounting fees incurred after that date would be deductible under s. 60(o).

90 C.R. - Q15

S.60(o) does not authorize the deduction of expenses incurred in preparing and presenting an objection or appeal under the Excise Tax Act.

Paragraph 60(o.1) - Idem [Legal Expenses]


Filion v. Canada, 2017 CAF 67

suspending an action to recover a retiring allowance did not suspend the running of the 7-year s. 60(o.1) limitation period

The taxpayer paid $35,813.78 in legal expenses between 1999 and 2003 to defend himself in a criminal prosecution for breach of trust and fraud by the Quebec City government. The taxpayer also initiated a civil suit in 2001 in order to recover a "retiring allowance" (i.e., termination payment) from the National Assembly. This suit was suspended until 2009 pending the outcome of the criminal case. Following a Superior Court hearing in 2012, the taxpayer was awarded a partial allowance of $35,016.44 (including interest) in 2013. The Tax Court denied his deduction under s.60(o.1) of his pre-2004 legal expenses from his 2013 retiring allowance as the expenses had not been incurred within the seven years preceding receipt of the allowance. The taxpayer argued that he was unable to obtain the retiring allowance within the seven year period due to the suspension of his civil action and that the time period during which the civil action was stayed should have been excluded in computing this period.

Before dismissing the appeal, Scott J found that the requirements in s. 60(o.1) were not satisfied, stating (at para 12, TaxInterpretations translation):

The criteria laid out in this provision are clear. A purposive interpretation of this provision confirms that it does not contain any ambiguity so as to allow for an interruption in the computation of the seven taxation years in the ITA… .

Administrative Policy

25 September 2014 External T.I. 2013-0500911E5 F - Legal Expense - Pension Benefit

legal expenses incurred to dispute proposed pension benefit reduction

The administrator of a defined benefit pension plan is seeking the authorization of the Office of the Superintendent of Financial Institutions ("OSFI") to amend the plan so as reduce benefits. Are legal expenses paid by the beneficiaries to make representation to OSFI in resisting this proposal deductible under s. 60(o.1)? CRA responded (TaxInterpretations translation):

[T]he legal expenses paid by a taxpayer to make representations to OSFI are generally expenses incurred to establish a right to a benefit under a pension fund or plan contemplated by paragraph 60(o.1). To the extent that the limits stipulated in paragraph 60(o.1) are satisfied, a taxpayer can deduct such expenses.

19 November 2012 Internal T.I. 2012-0433201I7 - Legal fees incurred re: job reinstatement

apportionment among objectives

Regarding a taxpayer's lawsuit for reinstatement of employment and associated retroactive pay, and to receive performance pay and other damages, CRA stated that the taxpayer's legal fees should be apportioned reasonably among the various objectives of the taxpayer's suit, and the deductibility of each portion should be considered based on its corresponding objective and on its success:

  • The portion relating to unpaid performance pay, which allegedly accrued during the taxpayer's employment, is deductible under s. 8(1)(b) regardless of the suit's outcome, in accordance with Loo.
  • The portions relating to reinstatement of employment and associated retroactive pay, banked leave, and lost promotional opportunities are not currently deductible (CRA stated that Turner-Lienaux establishes in general that a person is not "owed" salary or wages if he did not do the work or occupy the position that required the salary or wages to be paid). However, such portions may become deductible depending on the outcome:
    • If the taxpayer's suit is successful and the taxpayer is reinstated, then these portions relate to salary or wages owing and are deductible under s. 8(1)(b) (Fernando).
    • If the taxpayer's suit is successful in the main but the taxpayer is not reinstated, then these portions will fall under the s. 248(1) definition of "retiring allowance" and will be deductible under s. 60(o.1) to the extent of the amount received and included in income (e.g. not counting RPP and RRSP contributions).
    • If the taxpayer's suit is unsuccessful, then these portions cannot be said to be owing, and are not deductible.
  • The portion relating to pain and suffering awards, if any, are not deductible because damages for pain and suffering are non-taxable.

26 September 1997 T.I. 972342

There is no requirement that an individual contributing to an FRA be a non-resident in order for the amount to qualify as an eligible amount.

Any amount transferred from a foreign pension plan to an FRA is considered to be an employee contribution to the FRA and it would qualify as an eligible amount. This would also be the case in respect of employer contributions. "However, we have previously opined that where the purpose of the transfer from the pension plan to an FRA is to circumvent the application of subparagraph 60(j)(i) of the Act then we would consider the application of subsection 245(2) of the Act."

Amounts paid out of an SEP IRA or a 401(k) pension plan would be considered payments out of a pension plan for purposes of the Act.

24 March 1995 T.I. 942430 (C.T.O. "Legal Fees")

Fees paid to a party other than a firm of barristers and solicitors could qualify as legal expenses if they can be regarded as being for services pertaining to the domain of law.

22 July 1992 Internal T.I. 7-921394 -

Legal expenses incurred to buy back pensionable years or to adhere to a pension plan are not deductible.

Paragraph 60(t) - RCA distributions


Jim Kahane, Uros Karadzic, Simon Létourneau-Laroche, "A Fresh Look at Retirement Compensation Arrangement: A Flexible Vehicle for Retirement Planning", Canadian Tax Journal (2013) 61:2, 479 – 502.

Practical effect of limitation (p. 487)

In cases where an employee's contribution does not meet these conditions [for deduction under s. 8(1)(m.2)] – for example, because the employee is not legally required to contribute to the RCA – the employee may be entitled to a deduction at a later time when there is an income inclusion from the RCA, such as when the employee retires or dies. [fn 35: Paragraph 60(t)] This provision allows the employee to recover undeducted contributions to the RCA, plus any amount paid or received to acquire or dispose of an interest in the RCA. [fn 36: … Explanatory Notes…December 1997….] The deduction is limited to the amount of the benefit included in income for a given year. Practically speaking, several years could elapse before the employee is entitled to a full deduction of the contributed amounts, so in certain situations, it may not be appropriate to make such contributions.

No deduction for unreasonable contributions (pp. 487-8)

The CRA has stated that the provision allowing the deduction of employee contributions is not intended to provide a deduction for contributions that are considered unreasonable if paid in full by the employer. The CRA challenged a situation where an employer, in addition to his own contributions to the RCA, paid an amount to an employee who then made a contribution to the RCA, and the total amount contributed exceeded a reasonable amount. [fn 37: …2005-013240107….] …