fras006

I am filling out my Canadian Income Tax form. My question: Can I claim the amount of money I paid the UK government to top-up my UK OAPension? I have paid them some significant payments over the past few years. I am now receiving the UK pension which I am declaring as income on my CRA form. But, can I deduct the top-up amounts as expenditures?
Any advise is welcome.

JonboyE

You cannot deduct the amount you contribute to a foreign pension plan.

fras006

Thanks John,
Where did you get this info from? I have had conflicting suggestions.

Tangram

He is an accountant. I would trust him.

fras006

Thanks for replying.

JonboyE

There is nothing specific in Law to say you cannot deduct the contributions, but you cannot rely on the silence. More to the point, there is nothing in the Income Tax Act to say you can deduct the contributions, therefore you can't. If that makes sense.

You are allowed to deduct contributions to a registered pension scheme, but the UK state pension is not a registered scheme in Canada.

When taxpayers ask for rulings that might apply to other people the CRA issue the substance of their decision as a Technical Interpretation. This is from # 9817575:

you requested our opinion as to the deductibility, pursuant to the Canadian Income Tax Act (the “Act”), of additional contributions that you wish to make to the U.K. National Insurance Plan. These additional contributions would increase your entitlement to benefits under the British Basic (old age) Pension when you reach age 65. ... Contributions to a pension plan are generally deductible in computing income if the pension plan has been registered by Revenue Canada for the purposes of the Act. Also, a deduction from Canadian federal income taxes otherwise payable is available for contributions made to the Canada Pension Plan. However, there is no deduction available under the Act for contributions made to a U.K. (foreign) pension plan. Nevertheless, you will be required to include in computing your income for Canadian tax purposes all amounts you receive under the British Basic Pension. This is because, as a Canadian resident, you are taxable on your world income. The Canada-U.K. Income Tax Convention (1978) does not provide any relief in this regard.

scootb

Sorry to crash in,but is it worth continuing paying NI contributions for the UK state pension?
I don't plan on returning to the UK if everything goes as I hope it does.

Steve_P

While this statement is true in regards to the OP's question. It is not true as far as all foreign state pensions go.

Whether or not there is a law which states you cannot do this I have no idea but there is a form downloadable from the CRA website called "Employee Contributions to a Foreign Pension Plan or Social Security Arrangement for 2012 - Non-United States Plans or Arrangements". Form number RC269 E (12) Link to said form: http://www.cra-arc.gc.ca/E/pbg/tf/rc269/rc269-12e.pdf This form does specifically state that the UK is not a country with which Canada has such an "arrangement". As it lists said countries and Canada is not one of them.

You can as JonboyE stated contribute to a UK employer-sponsored pension plan, also indicated on said form.

Cheers
Steve