Newsletter no. 00-1, Foreign Service Update
February 7, 2000
This newsletter is to advise you of two revisions to Newsletter 93-2, the Foreign Service Newsletter. Newsletter 93-2 outlines the conditions that apply to recognizing foreign service under a registered pension plan.
The first revision relates to the three-year limit on foreign service contained in Part III, section 2, Employment with a non-resident participating employer or non-participating employer. This limit is being increased to allow the first five years of a member's employment outside Canada to qualify as eligible service under subparagraph 8503(3)(a)(vii) of the Income Tax Regulations. The requirements that the benefits be provided on a current service basis and only for the first years of employment outside Canada continue to apply, subject to the transitional relief described below.
To ensure that plan members who were affected by the three-year limit can now benefit from the increased limit, we will allow benefits to be provided to those members for an additional two years of their employment outside Canada. The additional benefits may be provided on a current service or past service basis or any combination of current and past service, subject to an overall limit of five years. This transitional relief applies only to the extent that the additional benefits are credited on or before December 31, 2001. We will determine on a case-by-case basis whether subsection 8303(10) of the Regulations may apply to allow the past service benefits to be excluded in calculating the member's PSPA. In making this determination, we will apply the same guidelines as we apply in Part III, section 1 of the Newsletter.
We are also changing the way we approve contributions to money purchase provisions for members employed outside Canada. Part IV of Newsletter 93-2 advises that the Registered Plans Division will consider requests to accept the remuneration of a member as compensation in a money purchase provision on a case by case basis. Part V, section 2 states that money purchase contributions on behalf of each plan member employed outside of Canada must be approved by us in writing. We will now be giving these approvals on a plan-by-plan basis, rather than giving approval for each individual. We will apply similar criteria in determining the acceptability of money purchase contributions as are applied to defined benefits in Part III of Newsletter 93-2, as revised by this newsletter.
These changes apply after 1999 to new and existing foreign service arrangements. All other conditions of Newsletter 93-2 continue to apply.
Where to get help
Registered Plans Directorate
You can find more information at Savings and pension plan administration.
Toll-free in Canada and the United States: 1-800-267-3100.
If you are calling from outside of Canada or the United States, call us collect at 613-221-3105. The Registered Plans Directorate accepts collect calls.
By mail and courier
Registered Plans Directorate
Canada Revenue Agency
875 Heron Rd
Ottawa ON K1A 0L5
We welcome feedback on this bulletin. Send comments by email to RPD.LPRA2@cra-arc.gc.ca.
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