Section 23: Pensions to former employees

23. Pensions to former employees (1) Subject to subsection (2), the Director-General may, in the case of a person deriving gross income specified in section 10 (1) (b), allow a deduction in respect of any amount which is not deductible otherwise than under this section and which, in the opinion of the Director-General, is reasonable in the particular circumstances of the case, paid by the person in that income year by way of a pension to any former employee in the business of that person, or to the surviving spouse of that employee, in consideration of the past services of that employee in that business of the person, where the Director-General is satisfied that— (a) the pension is receivable by the recipient— (i) by virtue of any enactment; (ii) as of right under a written document for a fixed period or for life; (iii) in the case of the surviving spouse, for a fixed period or for life or until he or she remarries; or (iv) on grounds which the Director-General determines to be compassionate grounds; and I5 – 23 [Issue 7] Income Tax Act (b) except in the case of the death of the employee while in the employment of the person, the employee did not retire from his employment before attaining the appropriate retiring age. (2) This section shall not apply where because of any relationship to or with the employer or otherwise the former employee or the surviving spouse had or has, in the opinion of the Director-General, any control in relation to the payment of the pension by the person. (3) For the purpose of this section— “appropriate retiring age” means— (a) not less than the age of 50; (b) such earlier age as the Director-General considers reasonable, having regard to the nature of the employment of the person or service or the general terms of employment in the business or occupation in which the person was employed; (c) the age at which the person retired in the case of retirement on the ground of serious illness or permanent disability; or (d) the age at which a person ceased to be employed in any fulltime employment and the Director-General is satisfied that he ceased to be so employed by reason of redundancy or other similar circumstances.