I should like to say a word or two about taxation in connection with teacher's contributions to the superannuation fund, based upon a letter which arrived just in time to be discussed on this resolution. The system of pension for teachers in Saskatchewan has been based on a double or triple scheme. It is partly a service pension and partly made up of the proceeds of whatever annuity certain contributions made throughout the teacher's earning life will buy. Up to the present, under the Saskatchewan Teachers' Superannuation Act of 1942, the amount of statutory deduction has been four per cent. To that act there has been an amendment by which the teacher is now allowed to pay in, in addition to his compulsory four per cent, certain payments which I suppose might be classed as voluntary. They are voluntary in regard to paying in
Income War Tax Act
but they are not voluntary in regard to taking out, because I understand that the amendment sees to it that the funds are kept in there until the teacher ceases to teach. It is the desire of the Saskatchewan teachers' federation, as expressed in this letter from the secretary, that this matter be brought to the attention of the minister for the purpose of discovering the position in regard to these extra payments. I might read a line or two from the letter:
This year's amendment to the act-
That is the Saskatchewan Teachers' Superannuation Act of 1942.
- provides that not less than four per cent shall be deducted at the source but a teacher may elect to have a greater percentage deducted at source, and we are asking that any amount deducted be exempt from income tax.
My correspondents point out that the dominion act provides for exemptions up to an amount of $900 per annum. They also point out that if a teacher contributes to the fund and1 withdraws those contributions, that amount is taxable as income for the year in which it is withdrawn. That is to say, under the new policy, which I think was initiated m 1945, if pensions are liable to income tax then contributions should not be; otherwise you have a system of double taxation. Perhaps the minister would comment on that. In the meantime, in Hansard for 1945, at page 3427, I found something said by the previous minister of finance on this matter:
We are now changing the law in accordance with the recommendations of the royal commission to make all contributions to the pension plan deductible from income for tax purposes and to provide in general that pension payments shall be subject to tax.
That was where I got this idea of double taxation. On the previous page the former minister is reported to have said:
In the future it will not be possible to set up funds like that at all. The income of the fund will be free of tax, but the pensioner, the contributor, in every case will be entitled to deduct his contributions from his income for tax purposes and he will be taxed in full on his pension.
Perhaps the minister would comment on that so we can get some guidance for these people.