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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues:
A Canadian resident originally from the U.K. is allowed to make current and arrears contributions to the U.K. National Pension Plan ("U.K. Plan") in order to increase the pension she will receive from the U.K. Plan. Can she deduct these additional contributions in computing her income for Canadian income tax purposes?
Position: No.
Reasons: There is no provision in the Act that provides for a deduction.
XXXXXXXXXX 2002-014023
G. Kauppinen
August 2, 2002
Dear XXXXXXXXXX:
Re: Voluntary Contributions to U.K. National Pension Plan
This is in reply to your letter dated May 9, 2002 wherein you requested our opinion as to the deductibility, pursuant to the Canadian Income Tax Act (the "Act"), of current and arrears contributions that your wife, now a Canadian resident, has made and is making to the U.K. National Pension Plan (the "U.K. Plan"). These contributions, and additional contributions to be made until your wife turns 60 in 2004, will eventually entitle your wife to a weekly U.K. pension.
Contributions to a pension plan are generally deductible in computing income if the pension plan has been registered by the Canada Customs and Revenue Agency for the purposes of the Act. Also, a deduction from Canadian federal income taxes otherwise payable is available for contributions made to the Canada Pension Plan.
However, there is no deduction available under the Act for contributions made to a U.K. (foreign) pension plan. Nevertheless, your wife will be required to include in computing her income for Canadian tax purposes all amounts she receives under the U.K. Plan. This is because, as a Canadian resident, she is taxable on her world income. The Canada-U.K. Income Tax Convention (1978) does not provide any relief in this regard.
We trust our comments will be of assistance to you.
Yours truly,
Mickey Sarazin, C.A.
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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