http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/181687/index.do#
Jacques v. The Queen (September 27, 2016 – 2016 TCC 245, Graham J.).
Précis: In 2009 Ms. Jacques received $389,502 in benefits under a US plan that had been owned by her late sister. The plan was a 401(k) plan and was subject to section 401(a) of the US Internal Revenue Code. CRA taxed the funds as a payment from a superannuation or pension plan. The Tax Court reviewed the evidence and concluded that the fund did not have the essential characteristics of such a plan. Accordingly the appeal was allowed with costs.
Decision: After a careful review of the facts and the law the Court concluded that the 401(k) plan did not have the characteristics of a Canadian superannuation or pension plan:
[20] In Woods v. The Queen, Justice Boyle stated that a “superannuation or pension fund or plan is an arrangement which provides for payment of regular post-retirement income to employees and determines the entitlement, the amount and frequency of such payments”.
[21] The Plan did not provide for the payment of anything that could be described as a fixed or determinable allowance or a regular post-retirement income. The default rule under the Plan was that distributions out of the Plan were to be made in a single lump sum payment. An employee who had attained the age of 59.5 years could withdraw some or all of his or her account balance as a lump sum whether he or she continued to work or not. Anyone who retired between the ages of 59.5 and 70.5 had to take his or her money out in a single lump sum payment. The only way that anything resembling a fixed or determinable allowance was to be paid was if a participant reached the age of 70.5 years and was still working and the participant had not already taken a fixed lump sum payment and did not elect to take one then. In that scenario, the participant was forced to begin receiving minimum annual distributions. Even then, the participant had the ability to take as much out of the Plan as he or she wanted at any time.
[22] In my view, it is not enough that some participants in the Plan were forced to receive something resembling a fixed annual distribution. The simple fact is that everyone else received a single lump sum payment. This is far more consistent with a savings plan than a superannuation or pension fund or plan.
[Footnote omitted]
Accordingly the appeal was allowed with costs.