24 October 1995 External T.I. 9523385 - RRIF MINIMUM AMOUNT IN YEAR OF TRANSFERS BETWEEN RRIF'S

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 more than 1 minimum amount must be withheld/paid in a calendar year to annuitant where 2 or more transfers.

Position TAKEN:

No.

Reasons FOR POSITION TAKEN:

Only one "minimum amount" in a calendar year since transferee RRIFs each have nil "minimum amount" in year entered into.

XXXXXXXXXX 952338

Attention: XXXXXXXXXX

October 24, 1995

Dear Sirs:

Re: Registered Retirement Income Fund (RRIF)

This is in reply to your facsimile transmission of August 31, 1995, in which you ask whether successive carriers of an annuitant's RRIF must each withhold and pay a "minimum amount" as defined in subsection 146.3(1) of the Income Tax Act (the "Act"). In the situation described in your correspondence, the annuitant transfers the RRIF property twice in one calendar year.

Your query relates to the definitions of "minimum amount" and "retirement income fund" in subsection 146.3(1) of the Act and to the registration requirement in paragraph 146.3(2)(e.1) of the Act.

With respect to the first transfer in the calendar year and assuming that the transferor RRIF was entered into in a preceding calendar year, the "minimum amount" as defined in subsection 146.3(1) of the Act is basically the product of the fair market value of the property in the transferor RRIF as at the beginning of the year and the prescribed amount for that year.

Where the annuitant requests the transfer, the transferor RRIF is required by paragraph 146.3(2)(e.1) of the Act to withhold an amount equal to the lesser of 1) the minimum amount thus calculated and 2) the fair market value of all the property transferred. This amount is to be paid to the annuitant in the year of the transfer.

The transferee RRIF, in accordance with the definition of a "retirement income fund" in subsection 146.3(1) of the Act, must be an arrangement under which the carrier agrees to pay to the annuitant in each year "after the year in which the arrangement was entered into" the minimum amount for the year. Furthermore, the definition of "minimum amount" states that the minimum amount is nil "for the year in which the fund is entered into". In the year of transfer, therefore, there is no "minimum amount" for the first or any successive transferee RRIF since that is the year in which the arrangement is entered into.

Although the foregoing comments are not binding on the Department, we trust they will be of assistance to you.

Yours truly,

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