(Div B, Subdiv d,e,g, S56-66,
OTHER SOURCES OF INCOME
S56 - This includes miscellaneous taxable amounts not
attributable to sources previously studied:
Benefits in the nature of pensions
: Old Age Security benefits, Canada Pension Plan benefits,
Death Benefits (received from former employer on or after death of employee; $10,000
exemption), Employment Insurance Act benefits.
Pension Income Splitting with a spouse who is in a lower tax bracket (for tax reduction):
CPP – 50% of combined CPP benefits may be paid to a spouse (some additional
restrictions) – this requires application to HRDC.
Pension Income which qualifies for the pension tax credit – effective 2007, where both
parties agree , up to 50% of eligible pension income may be allocated to a spouse.
Retiring allowances and other payments on termination of employment
which are not included in
employment income under S6(3), are generally taxable as a retiring allowance. This includes
payments in recognition of long service or compensation for loss of office, including court-
awarded damages. Specific exclusions include amounts such as pensions, death benefits, and
other amounts otherwise required to be included in income under other sections of the ITA.
(Note the possibility to “rollover” qualifying amounts of a Retiring Allowance to an RRSP, to
defer the income tax consequences.)
Family support payments resulting from marital splits
are taxable to the recipient only if the
payments are deductible to the payor.
Pre-April 30, 1997 agreements: both spousal and child support are taxable to the recipient (and
deductible by the payor).
Post-April 30 1997 agreements (new or revised): spousal support (if specifically identified in the
agreement) remains taxable to the recipient (and deductible by the payor), but child support is no
longer taxable (or deductible). (Result of Thibaudeau v The Queen decision by Supreme Court)
are included in other income when received. An offsetting deduction for the
principal portion of the annuity payment is available under S60 below, where the annuity was
acquired with after-tax funds rather than with funds from deferred income plans.
Receipts from deferred income plans
(RRSP, RRIF, DPSP,) are generally included in income
100%, whether the amounts are lump sums or periodic payments, since neither the original
contributions nor the income earned has been subjected to taxation. RESP benefits representing
income and CESG grants are taxable on receipt, usually by the student. The capital portion is
returned tax free, since no deduction was allowed on the contribution. (See page 418-420)
Education assistance payments
including scholarships, bursaries, fellowships and research grants
in excess of research costs are taxable, subject to an annual exemption of $500 for scholarships
and bursaries if the student cannot claim an education credit
with respect to the program of
Effective 2006, scholarships, bursaries and fellowships a tax exempt if the student qualifies for