All those with Defined contribution UK pensions
Nov 5th 2017, 2:53 pm
#1
Just Joined
Thread Starter
Joined: Jun 2017
Location: comox bc
Posts: 22
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.
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.
Nov 8th 2017, 12:15 am
#2
Grumpy Know-it-all
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: All those with Defined contribution UK pensions
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.
Nov 8th 2017, 8:28 am
#3
BE Forum Addict
Joined: Apr 2013
Location: London, ON
Posts: 2,485
Re: All those with Defined contribution UK pensions
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.
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.
