IPP surplus payment and Part XIII tax

In technical interpretation 2017-0732681E5 (September 12, 2019), the CRA took the position that the distribution of an actuarial surplus from an individual pension plan to a US-resident taxpayer would not qualify for US treaty relief. The CRA stated that the surplus was a lump-sum amount rather than a “periodic pension payment” contemplated by section 5 of the Income Tax Conventions Interpretation Act. The CRA also found that commutation payments and minimum amount payments (made to comply with subsection 8503(26) of the Income Tax Regulations) would not qualify as “periodic”.

Marlene Cepparo, “No Reduced Withholding Tax for Pension Payout to US Resident” 27:12 Canadian Tax Highlights (December 2019)

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