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Notes on Individual Rules under the Japan-Canada Social Security Agreement

120010010-349-697-340 Last updated date:3 15 2013

1. Agreement excepts Quebec Pension Plan

The Japan-Canada Social Security Agreement covers two pension systems of Canada, one is the Old Age Security (OAS) and the other is the Canada Pension Plan (CPP). As of September 2007, State of Quebec has it own pension plan called Quebec Pension Plan (QPP) which is not included in the Japan-Canada Agreement. This means there is neither coverage arrangement nor totalization arrangement between the Japanese pension systems and the QPP.

2. Canadian pension system for elimination of dual coverage

As mentioned above, the Japan-Canada Agreement covers both the OAS and CPP. However, since the OAS is not a contributory system but is entirely financed by general tax revenue, you can apply for "elimination of dual coverage" only between the CPP and the Japanese pension systems.

3. Crews of ships

Under the Canadian pension system, if you are an employee on a ship, you will be covered only by the pension system of the country in which your employer is located. Likewise, under the Japanese Employee' Pension Insurance system, if your employer is located in Japan, you will be covered by the Japanese pension system. Therefore, there will not be dual coverage cases which may require establishments of special treatment under the Agreement. That is why there is not any special rule about crews of ships in the Agreement.

4. Six-month rule

In addition to other requirements for exemption from coverage under the CPP, if you are temporarily sent by a company in Japan to work in Canada, you must have worked or resided in Japan for at least 6 months of coverage under the Japanese pension systems immediately prior to your detachment to Canada. If you are sent by a company in Canada to work in Japan, the same rule is applied.

5. Detachment to a related company

Under the Canadian pension system, any person working for a Canadian company who is sent to its related company in Japan can continue to be covered by the CPP only when the company in Japan is determined as "related" in consideration of the Canadian corporate income tax law and other relevant laws by the Canada Revenue Agency. In order for you to be exempt from the Japanese pension systems while you are sent from Canada and work temporarily in Japan, your Japanese company must be the related company to your original Canadian company.

6. Extension of the period of exemption

If you need to continue to work as a detached worker (or a self-employed person) in the other country for more than 5 years because of unforeseeable reasons or special circumstances, you may be granted extension of the period of exemption for up to 3 years upon individual examination. In this case, you continue to remain subject only to the system in your original country where you are detached from. If the extension of exemption is not granted, you will be covered only by the system of the country in which you work during the period exceeding the initial 5 years.

7. Coverage periods totalization for Japanese benefits

You can consider your period under the CPP in order to meet the eligibility requirements for benefits under the Employees' Pension Insurance system and the National Pension system of Japan, if you do not have enough coverage period only under the Japanese systems. (For this purpose, your residence period in Canada under the OAS is not considered.) For the totalization, your coverage of one calendar year under the CPP is considered 12 months of Japanese coverage period. Please note that when part of your CPP coverage period is also covered by Japanese system, the specific CPP period of the dual coverage is not considered for totalization.

8. Coverage periods totalization for Canadian benefits

If you do not have enough OAS or CPP coverage period alone to qualify for benefits, your coverage period under the Japanese pension systems will be considered for Canadian benefits, as long as you have period of residence in Canada under the OAS or period of coverage under the CPP for one year or longer. Please note that when part of your Japanese coverage period is also covered by the OAS or CPP, the specific Japanese period of the dual coverage is not considered for totalization.
«Totalization rule under OAS "Coverage Link"»
In principle, while you reside in Canada, it is considered to be period of residence under the OAS. However, if you are covered by the Japanese pension system during your residence and work in Canada, it is no longer considered to be valid period under the OAS. (While, the period is still considered to be CPP period.) It is regardless of periods before or periods after the implementation of the Agreement.
Likewise, for your spouse or common-law partner who live with you, their period of residence in Canada is not considered as residence period in Canada for the purposes of determining their OAS entitlement excluding their coverage period under the CPP or QPP through their own work as an employee or a self-employed.
«How to consider your Japanese period for CPP»
One calendar year including at least three months coverage period under the Japanese pension systems is considered as one year coverage period under the CPP. Incidentally, there is no minimum coverage period requirement for the CPP Retirement pension. Therefore you will become eligible for the benefit without totalization of periods of both countries. On the other hand, you need to meet each coverage period requirement for entitlement to the CPP Survivors' and Disability benefits. For these benefits, your Japanese coverage period can be taken into account to satisfy the requirements and you may be entitled to the benefit by the totalization.

9. Retroactive payment of Canadian pension benefits (When you claim for Canadian pension benefits)

In principle, you will be entitled to Canadian benefits starting from the following month in which the month you reach your pensionable age or your claim is made. And the OAS pension will be retroactively payable for up to 11 months and the CPP Retirement pension will be retroactively payable for up to 12 months after your pensionable age.
Please note that you can claim for the OAS pension after your 64th birthday if you live in Japan. And you can file your claim for the CPP Retirement pension 6 months before the pensionable age.
Please refer to the guide for completing an application to find your pensionable age for the CPP pension.

10. Payment of Canadian benefits

If you live in Japan, you can choose from following payment options:

  1. Check in Canadian dollars which are sent to your address in Japan
  2. Direct deposit to your bank account in Canada

11. Income tax on pension benefits of Japan and Canada

There is the Income Tax Convention between Japan and Canada. However, there is no specific provision for income tax on pension benefits in the Income Tax Convention. Therefore the tax imposed on your pension benefits from the other country are subject to the Tax Laws of each country.

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