18 March 1998 External T.I. E9510935 - rrsp or rrif paid to non-resident - ireland

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: Tax rate on RRIF payments made to resident of Ireland.

Position: - Any RRIF payment that is a periodic pension payment (PPP) as defined under section 5 of the Income Tax Conventions Interpretation Act (ITCIA) is a pension for the purposes of Article XI of the Canada-Ireland Income Tax Agreement (the "Convention") and is exempt from tax.

		- Any RRIF payment that is not a PPP as defined in section 5 of the ITCIA (e.g. a lump-sum RRIF payment) is not a pension for the purposes Article XI of the Convention; such a lump-sum RRIF payment is subject to tax at the rate of 15% under Article VI of the Convention which deals with other income.

Reasons:

XXXXXXXXXX
951093
Attention: XXXXXXXXXX G. Middleton
(613) 957-2122

March 18, 1998

Dear XXXXXXXXXX:

This is in reply to the letter written by XXXXXXXXXX of your company dated April 21, 1995 concerning the withholding tax rate on payments made under a registered retirement income fund (“RRIF”) to a resident of Ireland. We apologize for the delay in our reply.

“Periodic pension payment” is defined in section 5 of the Income Tax Conventions Interpretation Act (“ITCIA”) and paragraph (c) of the definition deals with payments under a RRIF. If a RRIF payment made to a resident of Ireland is a “periodic pension payment” under the definition, the RRIF payment is considered to be a pension for the purposes of Article XI of the Canada-Ireland Income Tax Agreement (the “Convention”) and there is no withholding tax on such a payment.

If a RRIF payment (e.g. a lump-sum RRIF payment) is not a “periodic pension payment” as defined under section 5 of the ITCIA, such a RRIF payment would not be a pension for the purposes of Article XI of the Convention and, accordingly, such a RRIF payment would be subject to Canadian non-resident withholding tax at the rate of 15% pursuant to Article VI of the Convention which deals with other income amounts.

In the determination as to whether or not a particular RRIF payment made to a person is a “periodic pension payment” as defined under section 5 of the ITCIA, the total of all RRIF payments made to the person in the calendar year at or before the time of the particular RRIF payment must be taken into account.

We trust the above comments will be of assistance to you.

Yours truly,

for Director
Reorganization and International Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch