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HMRC internal manual

Double Taxation Relief Manual

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HM Revenue & Customs
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Double Taxation Relief Manual: Guidance by country: Canada: Pensions and annuities

Article 17 of the agreement provides that all pensions (including governmental and local authority pensions) will be taxable only in the State in which the pensioner is resident. So, pensions arising in Canada and paid to a United Kingdom pensioner will be taxable only in the United Kingdom.

For the purposes of the agreement, the term “pension” includes any payment under a superannuation, pension or retirement plan, Armed Forces retirement pay, war veterans’ pensions and allowances and any payment under a sickness, accident or disability plan and any social security payment, but it does not include an annuity.

Annuities arising in one State (the State of source) may be taxed in that State but the source State taxation is limited to 10% of the amount that would otherwise be taxable under the source State’s laws. Annuities may also be taxed in the State in which the pensioner resides.

If a United Kingdom resident has paid Canadian tax on his Canadian pension or on the whole of his Canadian annuity, he should claim repayment of the whole of the tax (charged on a pension) or part of the tax (charged on an annuity) in accordance with the procedures covered in DT4618.