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Volume 5 - Opinions of Counsel SBEA No. 1

Opinions of Counsel index

Aged exemption (income requirement) (noncontributory trust fund established by former employer) - Real Property Tax Law, § 467:

Payments to a retired employee from a noncontributory trust fund established by his or her former employer are “retirement benefits” as that term is used in section 467 of the Real Property Tax Law and are income for purposes of such section.

We have received an inquiry concerning the income requirement of the so-called “aged exemption,” section 467 of the Real Property Tax Law. The question is whether money withdrawn over a ten-year period by an applicant from an account in trust established by his former employer should be considered income for purposes of this exemption. The applicant made no contributions to this account during his period of employment.

Section 467 authorizes a granting municipality, at its option, to set an annual income limit of between $3,000 and $6,500 for the income tax year immediately preceding the date of making application for exemption. This section further provides (in subd. 3(a)) that “[s]uch income shall include social security and retirement benefits, interest, dividends, net rental income, salary or earnings, and net income from self-employment, but shall not include gifts or inheritances.” (emphasis added)

The precise nature of the account in question has not been indicated to us (i.e., it may be a trust per se, or it may be an annuity payable out of a pension trust). Nevertheless, it is our opinion that, however designated, payments to a retired employee from a noncontributory trust fund established by his or her former employer are “retirement benefits” as that term is used in section 467. These payments appear to be simply a form of deferred compensation to employees to assist them in their later years in return for the services they rendered during their time of employment, and therefore they could not be considered a “gift” which has been judicially defined as “a voluntary transfer of any property or thing by one to another without consideration” (McKenzie v. Harrison, 120 N.Y. 260, 265, 24 N.E. 458). (emphasis added)

Therefore, it is our opinion that these payments should be considered income for purposes of section 467.

May 1, 1975

Updated: