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:
Whether a registered pension plan fails to meet the criteria for registration as a pension plan and whether it also fails to be an RCA.
Position TAKEN:
Matter of fact.
Reasons FOR POSITION TAKEN:
Main argument is that there is no employment relationship.
XXXXXXXXXX 941287
Attention: XXXXXXXXXX
June 13, 1994
Dear Sirs:
Re: XXXXXXXXXX Pension Plan
This is in reply to your letter of May 11, 1994, in which you ask us to reconsider our comments in our previous letter of January 27, 1994 (document 933668), in light of additional facts.
You have cited a number of facts which you believe suggest that the XXXXXXXXXX Pension Plan (the "Plan") was never a pension plan and should not, therefore, have been registered as a pension plan under the Income Tax Act (unless as otherwise stated all references to this statute are to the Income Tax Act S.C. 1970-71-72, c. 63 as amended, consolidated to June 10, 1993 - the "Act"). You also conclude, based on the same facts, that the Plan was never an arrangement under which the employer makes contributions or sets aside assets to fund employee benefits payable on retirement or termination of employment; therefore, the Plan cannot be found to be a "retirement compensation arrangement" as defined in subsection 248(1) of the Act.
We agree that if there is no employment relationship between the XXXXXXXXXX then the Plan would not be a pension plan nor would it qualify as a retirement compensation arrangement (RCA).
Whether such a relationship exists, however, is a matter of fact which can only be determined after an examination of all the circumstances surrounding the relationship between the XXXXXXXXXX In any event, the Rulings Directorate does not comment on the tax consequences relating to actual fact situations and past transactions. Should you wish to obtain the Department's position on whether the Plan properly qualified for registration as a pension plan, please contact the Registered Plans Division. We will send a copy of this letter to the Division for its information.
We point out that if an employment relationship exists but the Plan, for other reasons, is not a pension plan, it could still qualify as a retirement compensation arrangement. None of the other factors you cited in your letter (i.e. the criteria under 2 on pages two and three of your letter and the fact that payments under the Plan are not made directly to the XXXXXXXXXX) would disqualify the Plan as an RCA.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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