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.
Principal Issues:
Are deductions payable under a United Kingdom pension scheme deductible in any manner?
Position:
No deductions would appear to be available in the specific case.
Reasons:
The payments in question are to be made under the UK social security system. There is no provisions that will allow any deductions per se. Following well developed positions on payments under foreign social security provisions, some payments may be treated as the payment of foreign taxes. However this treatment is not available with respect to voluntary contributions.
XXXXXXXXXX 980002
W. C. Harding
May 26, 1998
Dear Sir:
Re: United Kingdom Retirement Pension
This is in reply to your letters of December 17, 1997, and March 14, 1998, in respect of the tax treatment of contributions under the United Kingdom Social Security Contributions & Benefits Act. We thank you for providing the booklet detailing the terms of this Act.
Since your letter deals with a factual situation, we are unable to address your specific concerns in a general letter of opinion. Proposed transactions may only be considered when they are presented in the form of a request for an advance income tax ruling and only where the request is made in the manner set out in the Department's Information Circular 70-6R3. However, we can provide the following general comments which may be of assistance.
There is no provision under the Income Tax Act (the “Act”) that specifically allows a deduction of contributions under the United Kingdom’s social security programs. Nevertheless, the Department does accept that payments to some foreign social security programs will qualify as the payment of foreign “non-business income tax” within the meaning of paragraph 126(7) of the Act (i.e. foreign tax credit). However, this position is only applicable to mandatory contributions required at the time of a person’s employment and has not been extended to voluntary contributions made under programs of countries where a contributor lived prior to immigrating to Canada.
We trust these comments will be of assistance to you.
Yours truly,
Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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