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  • Service: Tax, International Executive Services
  • Type: Regulatory update
  • Date: 10/8/2013

Canada - Other retirement payments eligible for pension income splitting 

October 8:  A technical interpretation issued by the Canada Revenue Agency (CRA) addresses amounts received from “retirement compensation arrangement” eligible for pension income splitting, effective for tax years 2013 and later.

Background

Under current law, a taxpayer generally may split “eligible pension income” with the taxpayer’s spouse or common-law partner. Before 2013, payments made from a retirement compensation arrangement were not included in the definition of “eligible pension income.”


An amendment in Bill C-45 provides that amounts from a retirement compensation arrangement may be included in the definition of eligible pension income (subject to certain conditions), effective for tax year 2013 and later.

Technical interpretation

The CRA’s technical interpretation includes rules concerning the general conditions for retirement compensation arrangements to be eligible for pension income splitting. These provide that:


  • The taxpayer must be at least 65 years of age.
  • The retirement compensation arrangement payments must be in the form of life annuity payments and be supplemental to a pension received from a registered pension plan.
  • The payments to be split cannot exceed a specified limit minus the taxpayer’s other eligible pension income.

Read an October 2013 report prepared by the KPMG member firm in Canada: RCA Income is Eligible For Pension Income Splitting




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