20 September 1995 External T.I. 9521325 - DIVISION OF PROPERTY ON MARRIAGE BREAKDOWN

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 an amount can be transferred from a spouse's RPP, on marriage breakdown, to the other spouse's RPP, RRSP or RRIF.

Position TAKEN:

Yes provided the required conditions are met.

Reasons FOR POSITION TAKEN:

147. 3(5)

		5-952132
XXXXXXXXXX	M. Shea-DesRosiers

Attention: XXXXXXXXXX

September 20, 1995

Dear Sir/Madam:

Re: Division of property between spouse upon marriage breakdown Tax consequences

This is in reply to your fax of August 8, 1995 concerning the above-mentioned subject. You inform us that the

XXXXXXXXXX

and requests the Department's position on the tax implication on the division of pension benefits between spouses on marriage breakdown, in particular with respect to the amount transferred from a spouse's registered pension plan ("RPP") to the non-member spouse's RPP.

This question is dealt with in subsection 147.3(5) of the Income Tax Act (the "Act") which allows the direct transfer of a single amount from an RPP to another RPP or to a Registered Retirement Savings Plan ("RRSP") or to a Registered Retirement Income Fund ("RRIF") of a spouse or former spouse of a plan member, where the amount is transferred pursuant to a decree, order or judgment of a competent tribunal, or a written agreement, relating to a division of property in settlement of rights arising out of or on a marriage breakdown. Pursuant to subsection 147.3(9) of the Act, where an amount is transferred in accordance with subsection 147.3(5) of the Act, the amount shall not be included in computing the income of any taxpayer and no deduction may be made in respect of the amount in computing the income of any taxpayer.

A copy of form T2151 entitled Record of Direct Transfer of a "Single Amount" is enclosed for your information. Said form can be used to make a direct transfer of a single amount from an RPP to another RPP or to an RRSP or a RRIF. No T4A slip or official receipt is to be issued for such an amount and no income tax is to be withheld from an amount transferred under said subsection.

The amount transferred to the non-member spouse's RRSP does not affect the amount that he/she can contribute to his/her RRSP in the year the amount was transferred.

Furthermore, the amount transferred to the non-member spouse's RPP, RRSP or RRIF and the income therefrom will be taxable only upon its withdrawal from said plan.

We trust the above answers to your questions are satisfactory and will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch