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.
How to contact us
If you have questions about this newsletter, contact us at the Registered Plans Directorate.
Our telephone enquiries service is available Monday to Friday from 8:00 a.m. to 5:00 p.m. Eastern time. There is a voice mailbox system to take messages outside of these hours. We will return calls on the next business day.
In the Ottawa area
For service in English: 613-954-0419
For service in French: 613-954-0930
Elsewhere in Canada
For service in English: 1-800-267-3100
For service in French: 1-800-267-5565
Write to us
Plan administrators who need guidance on issues related to a specific plan can write to us at the Registered Plans Directorate, Canada Revenue Agency, Ottawa ON K1A 0L5. Our fax number is 613-952-0199.
We welcome feedback on this newsletter. Email your comments to RPD.LPRA2@cra-arc.gc.ca.
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