14 March 1997 Internal T.I. 9704747 - CPP AND DISABILITY PENSIONS

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 Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

		March 14, 1997

	Ottawa Tax Services Office 	HEADQUARTERS
	Gabor Obert                                    M. Eisner
	Client Services Division, 3rd Floor	(613) 957-8953
                                                    		970474

Application of subsection 56(8) and section 120.3 of the Income Tax Act

This is in reply to your memorandum of February 18, 1997, concerning the above-noted subject.

You have enclosed a copy of a letter issued by Human Resources Canada which sets out the amount of "disabled contributor's child benefits" under the Canada Pension Plan that were granted to an individual from September, 1993 to September, 1995.

You have asked us whether a portion of the benefits qualifies for the treatment set out in subsection 56(8) and section 120.3 of the Income Tax Act (the Act).

Under subsection 56(8) of the Act, an individual who receives a "disability pension" in a taxation year under the Canada Pension Plan, may elect to exclude a portion of the pension provided the portion exceeds $300 and relates to one or more preceding taxation years. Section 120.3 of the Act sets out rules concerning the income taxes payable in respect of the excluded amount.

The Canada Pension Plan provides separately for the payment of a "disability pension" and a "disabled contributor's child's benefit." It is, accordingly, our view that no part of the disabled contributor's child benefits set out in the letter from Human Resources Canada qualifies for the tax treatment set out in subsection 56(8) of the Act and section 120.3 of the Act.

We suggest that you consider the Department's guidelines for a remission of income tax in order to determine if the taxpayer may qualify. In this regard, if you have any further questions, we suggest that you discuss the matter with Mr. Bill McColm (957-9226), Section Chief of the Technical Review & Remissions Section of this Directorate.

John F. Oulton
Section Chief
Business, Property & Personal Section
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch