Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
1) Can we rule on the proposed addition of the RESP feature to the plan since the plan has been implemented?
2) Will a XXXXXXXXXX contributed to an RESP by the XXXXXXXXXX be a contribution by a Subscriber to an RESP as contemplated in 146.1 of the Act?
Position:
1) Yes.
2) Yes.
Reasons:
1) The RESP feature is not yet available under the plan.
2) The XXXXXXXXXX are the property of the XXXXXXXXXX , who can choose to contribute them to an RRSP, an RESP or a non-registered account.
XXXXXXXXXX 2000-004945
Attention: XXXXXXXXXX
XXXXXXXXXX, 2001
Dear XXXXXXXXXX:
Re: Amendment to the XXXXXXXXXX
This is in reply to your letter of XXXXXXXXXX requesting an advance income tax ruling on a proposed amendment to the above Plan. The Plan was the subject of an advance income tax ruling E2000-001768 issued by the Directorate on XXXXXXXXXX, 2000 (the "XXXXXXXXXX Ruling"), and amended by supplemental advance income tax ruling 2000-003642 dated XXXXXXXXXX, 2000 (the "XXXXXXXXXX Amendment"). The Plan was implemented in XXXXXXXXXX.
DEFINITIONS
For purposes of this letter, the relevant definitions are the following:
(a) "Act" means the Income Tax Act, R.S.C. 1985 (5th Supp.) c.1. as amended to the date hereof.
(b) XXXXXXXXXX.
(c) XXXXXXXXXX.
(d) "Company" means XXXXXXXXXX).
(e) XXXXXXXXXX.
(f) XXXXXXXXXX.
(g) "Investor" means XXXXXXXXXX.
(h) "LP" means XXXXXXXXXX.
(i) XXXXXXXXXX.
(j) "New Corp" means XXXXXXXXXX.
(k) XXXXXXXXXX.
(l) "Qualified Investment", in respect of an RRSP, means any investment which would be considered to be a "qualified investment" as that term is defined in subsection 146(1) of the Act; and, in respect of an RESP trust, means any investment which would be considered to be a "qualified investment" as that term is defined in subsection 146.1(1) of the Act.
(m) "Plan" means the XXXXXXXXXX plan as outlined in the XXXXXXXXXX Ruling, as amended by the XXXXXXXXXX Amendment and in this advance income tax ruling.
(n) XXXXXXXXXX.
(o) XXXXXXXXXX.
(p) "RESP" means a registered education savings plan as defined in subsection 146.1(1) of the Act.
(q) "RRSP" means a trust governed by a "registered retirement savings plan" as defined in subsection 146(1) of the Act.
(r) XXXXXXXXXX.
(s) "Subscriber" has the meaning assigned by subsection 146.1(1) of the Act.
(t) XXXXXXXXXX.
To the best of your knowledge and that of the Company or New Corp., none of the issues involved in this ruling request are:
a) in an earlier return of the Company, New Corp. or a related person;
b) being considered by any tax services office or tax centre in connection with a previously filed tax return of the Company, New Corp. or a related person;
c) the subject matter of any notice of objection filed pursuant to the Act by the Company, New Corp. or a related person; or
d) before the courts.
Some of these issues were the subject of an advance income tax ruling previously issued by the Directorate on XXXXXXXXXX. The Company did not, at that time, proceed with the transactions contemplated XXXXXXXXXX.
Our understanding of the facts and proposed amendment is as follows:
FACTS
1. The Company is a taxable Canadian corporation and a private corporation (as those terms are defined in subsection 89(1) of the Act) incorporated on XXXXXXXXXX Its registered office is situated at XXXXXXXXX. The business number is XXXXXXXXXX. The Company files its tax returns at the XXXXXXXXXX Tax Centre, and is served by the XXXXXXXXXX Tax Services Office.
2. The Company is the general partner in the LP, which was formed on XXXXXXXXXX. The issuance XXXXXXXXXX was disclosed by registering as a tax shelter (XXXXXXXXXX) and the annual filing of partnership information.
3. XXXXXXXXXX.
4. XXXXXXXXXX.
5. New Corp. is a taxable Canadian corporation and a private corporation (as those terms are defined in subsection 89(1) of the Act) incorporated on XXXXXXXXXX Its registered office is situated at XXXXXXXXXX Since New Corp. has been recently incorporated, the business number is not known yet. New Corp. files its tax returns at the XXXXXXXXXX Tax Centre, and is served by the XXXXXXXXXX Tax Services Office.
6. LP entered into a funding arrangement with Investor, who provided approximately $XXXXXXXXXX to XXXXXXXXXX to permit XXXXXXXXXX to XXXXXXXXXX on a XXXXXXXXXX basis. XXXXXXXXXX.
7. XXXXXXXXXX. All such services will be provided at commercial rates; there will not be any non-arm's-length dealings between the parties.
8. An affiliate of the Investor may also become a XXXXXXXXXX.
9. XXXXXXXXXX has implemented and will operate the Plan. Under the Plan, XXXXXXXXXX enter into contracts with XXXXXXXXXX, and agree to pay XXXXXXXXXX to the XXXXXXXXXX in accordance with the XXXXXXXXXX will not charge fees to XXXXXXXXXX for the XXXXXXXXXX, nor will XXXXXXXXXX impose conditions on XXXXXXXXXX that would be more onerous than those imposed on XXXXXXXXXX.
10. XXXXXXXXXX, and may offer XXXXXXXXXX where the XXXXXXXXXX or XXXXXXXXXX purchases various XXXXXXXXXX, and no enhanced XXXXXXXXXX.
11. XXXXXXXXXX pay an XXXXXXXXXX fee of $XXXXXXXXXX to XXXXXXXXXX to receive a XXXXXXXXXX.
12. XXXXXXXXXX will pay for their XXXXXXXXXX.
13. XXXXXXXXXX to an account XXXXXXXXXX.
14. The XXXXXXXXXX and the XXXXXXXXXX. The XXXXXXXXXX will be the XXXXXXXXXX of the XXXXXXXXXX, and will not be entitled to XXXXXXXXXX.
15. Subject to 16 below, XXXXXXXXXX in the XXXXXXXXXX for a particular XXXXXXXXXX reaches $XXXXXXXXXX, the XXXXXXXXXX will direct the XXXXXXXXXX to contribute the XXXXXXXXXX to an account at the XXXXXXXXXX (or an affiliate). The account at the XXXXXXXXXX (or an affiliate) may be an RRSP for the XXXXXXXXXX or the XXXXXXXXXX spouse, or a non-registered account for the XXXXXXXXXX.
16. If the XXXXXXXXXX is under 18 years of age at the time the balance of the XXXXXXXXXX in the XXXXXXXXXX for the XXXXXXXXXX reaches $XXXXXXXXXX, the Plan provides that the XXXXXXXXXX will arrange to purchase an XXXXXXXXXX in the name of the XXXXXXXXXX, and the XXXXXXXXXX may choose to contribute the XXXXXXXXXX to an RRSP of which he/she is the annuitant.
17. XXXXXXXXXX may by permitted to contribute XXXXXXXXXX in order to bring the XXXXXXXXXX.
18. There is an XXXXXXXXXX equal to XXXXXXXXXX passing through the XXXXXXXXXX during the previous XXXXXXXXXX months. XXXXXXXXXX If a XXXXXXXXXX ceases XXXXXXXXXX to be charged the $XXXXXXXXXX.
PROPOSED AMENDMENT
19. The Plan will be amended such that, in addition to the choices outlined in 15 above, a XXXXXXXXXX may direct the XXXXXXXXXX to contribute XXXXXXXXXX to an XXXXXXXXXX (or an affiliate) that is an RESP under which the XXXXXXXXXX is a Subscriber.
PURPOSES OF THE PROPOSED AMENDMENT
The purposes of the proposed amendment are:
i) to provide XXXXXXXXXX an opportunity to receive XXXXXXXXXX, and to have those XXXXXXXXXX to generate significant funds for education; and
ii) to provide XXXXXXXXXX with an opportunity to XXXXXXXXXX participation in the proposed Plan.
RULINGS GIVEN
Provided that the statement of facts and the description of the proposed amendment are correct and constitute a complete disclosure of all the relevant facts and terms of the proposed amendment, and that the proposed amendment is implemented in the manner described above, we rule as follows:
A. The proposed amendment to the Plan as set out in 19 above will not affect the rulings given in the XXXXXXXXXX Ruling as amended by the XXXXXXXXXX Amendment.
B. Where the XXXXXXXXXX directs theXXXXXXXXXX to XXXXXXXXXX to an RESP of which the XXXXXXXXXX is a Subscriber, the XXXXXXXXXX will constitute a XXXXXXXXXX to the particular RESP for purposes of sections146.1 and 204.9 of the Act.
These rulings are given subject to the limitations and qualifications set forth in Information Circular 70-6R3 dated December 30, 1996, issued by the Agency, and are binding on the Agency provided the proposed amendment is implemented on or before XXXXXXXXXX.
Nothing in this ruling should be construed as confirming any income tax consequences relating to:
(i) receipt of a XXXXXXXXXX when the XXXXXXXXXX;
(ii) income or gains earned on or from amounts XXXXXXXXXX.
(iii) taxation of the XXXXXXXXXX on income or losses arising from the XXXXXXXXXX held by or on behalf of XXXXXXXXXX who is under 18 years of age.
XXXXXXXXXX.
Yours truly,
XXXXXXXXXX
for Director
Financial Industries Division
Income Tax Rulings Directorate
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2001
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2001
Email this Content