We have received a number of inquiries concerning a letter sent to all CBC pensioners concerning income splitting. The letters sent to all retirees advised that the amount received in your pension surplus payment is not eligible for income splitting.
The Pensioners National Association has been seeking clarification. And this is what we have learned.
The letter concerns a little-known part of the income tax act. It’s a provision covered under section 60.03 and subsection 118(7) of the Income Tax Act. Lifetime retirement benefits, like ours, are the type of income payable from a registered pension plan and are considered as eligible for the purpose of pension income splitting. However, because the surplus payment does not qualify as lifetime retirement benefits, pension splitting is unavailable for the CBC Plan members.
We know several members have already filed their taxes and it’s unfortunate that this information came so late. Tax filings can be amended. If you have to make your adjustment request by mail, send a completed
T1-ADJ – T1 Adjustment Request form available on the CRA website.