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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues:
Does a court order dividing interests in particular annuity contracts cause the contracts to cease to be income-averaging annuity contracts? How should the insurer report the payments under these contracts to the annuitant(s) thereunder?
Position:
Unable to provide opinion. It is recommended that the annuitant(s) under the policies refer all relevant facts and documentation to their responsible tax services offices.
Reasons:
Questions raised could only be answered having regard to all relevant facts and documentation e.g., the annuity contracts, the terms of the court orders. The questions pertain to particular taxpayers' situations and, to significant degree, to payments made in prior taxation years.
XXXXXXXXXX 2001-010439
R. Maley
February 19, 2002
Dear XXXXXXXXXX:
Re XXXXXXXXXX
XXXXXXXXXX
This is in reply to your letter of March 5, 2001, which was forwarded to us by the Adjustments Section, Individual Returns and Payments Processing Directorate, Canada Customs and Revenue Agency. We apologize for the delay in responding to your letter.
Your letter briefly describes the terms of two annuity contracts, noted above. You go on to describe some circumstances that have been encountered by the original annuitant under those policies. A result of those circumstances is that the person who was the original annuitant's wife at the time the annuities were acquired is now a co-owner of the annuities. You are concerned that the circumstances that resulted in the change of ownership may, at some point, have affected the status of the original contracts for tax purposes. You are seeking guidance as to how you should be reporting the annuity payments to those persons.
Unfortunately, we are not in a position to clarify the issues you have raised. The questions in your letter pertain to a particular situation that could only be addressed having regard to all the relevant facts and documents. For example, the question whether particular agreements constitute "income-averaging annuity contracts" at any time within the meaning of subsection 61(4) of the Act could only be answered having regard to the specific terms and conditions of the particular contracts. The question whether a particular court order could cause a particular contract to lose its character as an income-averaging annuity contract (and thereby be deemed to have been disposed of pursuant to section 61.1 of the Act) is again, a question that could only be determined having regard to the terms of the particular order, and any other relevant documents. Moreover, the questions you have raised pertain, to a significant degree, to payments made in prior taxation years (or to payments that may have been deemed by the Act to be made in prior taxation years).
To clarify this issue, we recommend that the annuitant(s) under the policies at issue refer all the relevant facts and documentation to their tax services offices for clarification.
Sincerely,
F. Lee Workman
Financial Institutions
Financial Industries Division
Income Tax Rulings Directorate
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