Words and Phrases - "pension"
23 February 2001 External T.I. 2001-0066265 F - Salaire différé français
A French citizen residing in Canada had helped to run the family farm in France and, to thank him for those seven years of contribution, his father paid him a lump sum as “deferred salary”, a concept introduced by the French legislature pursuant to a Decree for the purpose of equity, namely to compensate a person who had contributed without consideration to the enrichment of the family group and to reduce the overall cost of transferring ownership to the son or daughter who remained part of the parental estate. The beneficiary had the right to claim (referred to as being pursuant to an deferred salary employment contract) the deferred salary on distribution of the estate of the farmer, but the beneficiary could be paid out sooner, as occurred here. Notwithstanding this label, the Decree specified that the deferred salary was not governed by the special rules governing contracts of employment.
In finding that the deferred salary was not employment or pension income given the absence of an employer-employee relationship, CCRA stated:
The term “pension” is not defined in the Act or the [Canada-France] Convention. However, paragraph 1 of Article XVIII of the Convention, which deals with pensions and annuities, refers to “pensions and other similar allowances ... paid in respect of past employment”. However … article 72 of the Decree and the absence of an employment contract or subordination relationship seem to indicate that the relationship between the creditor and the debtor of the “deferred salary” does not constitute an employer-employee relationship. Consequently, it seems to us that a payment made as “deferred salary” should not be considered a pension payment for the purposes of the Act and the Convention.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) | receipt of “deferred salary,” pursuant to a right established by French legislation, as compensation for contribution to the family farm was not income | 311 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition - Paragraph (b) - Subparagraph (b)(ii) | receipt of “deferred salary,” pursuant to a right established by French legislation, was not a pension given no previous employer-employee relationship | 306 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | “deferred salary” right of farmer descendant was a debt | 82 |
6 April 2023 Internal T.I. 2022-0929731I7 - Articles 18(2) and (3) of the Canada-Italy Treaty
Regarding the receipt by an individual resident in Italy of periodic Canada Pension Plan (“CPP”) and Old Age Security (“OAS”) benefit payments, the Directorate found that
- Art. 18(2) of the Canada-Italy Treaty limits the tax on Canadian-source pension income (including CPP) to the lesser of 15% of the total such income exceeding $12,000 and the amount of tax (referred to as the “as-if-resident” or “AIR” amount) that a resident of Canada would pay on that income.
- Art. 18(3) of the Treaty limits the tax on OAS income to the AIR amount (with the result that “[i]n most cases, that rate of tax is 25% in accordance with subsection 212(1).”)
The Directorate also stated:
One consequence of the different treatment is that unless the AIR amount is NIL, two separate calculations will be required in respect of CPP and OAS amounts paid to a resident of Italy.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Other Legislation/Constitution - Federal - Income Tax Conventions Interpretation Act - Section 5 | CPP and OAS are normally considered pensions for Treaty purposes | 90 |
31 July 2002 Internal T.I. 2002-0136937 F - Placement Français "Assurance-salaire-vie
The holder in France of an "assurance-salaire-vie," which is similar to a registered retirement savings plan except that a withdrawal from it is taxable only if made within the first eight years of the contribution, immigrates to Canada. The Directorate indicated that it was unlikely that withdrawals from the plan would be exempted under Art. XVIII(1) of the France-Canada Convention as a “pension” as the only contributions were employee contributions, nor would they qualify as an :annuity” per Art. XVIII(3). Under Art. XXI of the Convention, the withdrawals could be taxed in Canada, and also in France.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 233.3 - Subsection 233.3(1) - Reporting Entity | cost amount of foreign retirement plan may have been stepped up under s. 128.1(1) | 68 |