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Old Nov 5th 2017, 3:53 pm   #1
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Default All those with Defined contribution UK pensions

Hi
I have looked for an answer on here and many other places but so far not much luck.
A lot of good info about UK pensions and tax free amounts etc but can’t find much on the “end game”

The question is

How does the CRA treat your UK pension pot on death?
Is a nominated beneficiary on your UK pension pot the same as an RRSP nominated beneficiary. ie the funds can transfer across with no tax due. So effectively the pension can continue in payment -

Or is the total of your pot added to your estate and then you effectively pay 50% of that as tax to the CRA when you die?

Defined Benifit is much more straightforward. I have one of those as well. 2/3 of my pension payments goes to my wife. There is no intrinsic pension pot amount which could be considered.
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Old Nov 8th 2017, 1:15 am   #2
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Default Re: All those with Defined contribution UK pensions

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Originally Posted by eaglestorm View Post
How does the CRA treat your UK pension pot on death?
Is a nominated beneficiary on your UK pension pot the same as an RRSP nominated beneficiary. ie the funds can transfer across with no tax due. So effectively the pension can continue in payment -
That's my understanding, it transfers under UK rules to the nominated beneficiary, is still defined as a pension under Article 17 of the tax treaty so continues on. Only a spouse or dependent child is a "qualified beneficiary" under Canadian rules.

This is where it gets interesting because a SIPP is essentially a foreign trust recognized as a pension under Article 17, so if the beneficiary of the SIPP is not qualified but the SIPP carries on under UK law, then it is treated as a foreign trust and is taxed in the same way and has to make reports on T3.
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Old Nov 8th 2017, 9:28 am   #3
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Default Re: All those with Defined contribution UK pensions

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Originally Posted by Steve_ View Post
That's my understanding, it transfers under UK rules to the nominated beneficiary, is still defined as a pension under Article 17 of the tax treaty so continues on. Only a spouse or dependent child is a "qualified beneficiary" under Canadian rules.

This is where it gets interesting because a SIPP is essentially a foreign trust recognized as a pension under Article 17, so if the beneficiary of the SIPP is not qualified but the SIPP carries on under UK law, then it is treated as a foreign trust and is taxed in the same way and has to make reports on T3.
Is that specific to SIPPs (but different for UK Personal Pensions and Income Drawdowns)?
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