Tax Court of Canada


Income tax

Foreign income

Payment from IRA to taxpayer was payment out of foreign retirement arrangement

Taxpayer’s father died and left taxpayer U.S. individual retirement account (IRA). Taxpayer’s share was rolled over to IRA in his name and funds were distributed to him, with amounts withheld for U.S. income taxes. Canada Revenue Agency (CRA) added amount in IRA to taxpayer’s income and allowed him foreign tax credit to account for U.S. taxes withheld. Taxpayer appealed on ground that IRA was inheritance. Appeal dismissed. Taxpayer received amount as distribution from IRA and not from father’s estate. Payment from IRA to taxpayer was clearly payment out of “foreign retirement arrangement” within meaning of s. 56(1)(a)(i)(C.1) of Income Tax Act. Result of legislation was to treat IRA distribution in much same way as if it was distribution from RRSP of his father. As result, distribution had to be included in taxpayer’s income.

Owen v. The Queen (2018), 2018 CarswellNat 2131, 2018 TCC 90, Gaston Jorré D.J. (T.C.C. [Informal Procedure]).

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