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 periodic payments out of an RRSP before maturity are acceptable if only one "redemption" request made each year.
Position:
Timing or form of request for payments is not subject to any provisions in Act - but if request relates to whether amount is "lump sum" or not, go to Source Deductions.
Reasons:
Nothing in 146 prevents periodic payments before maturity; whether amount is "periodic annuity payment" will influence withholding tax rate.
960433
XXXXXXXXXX P. Spice
Attention: XXXXXXXXXX
April 11, 1996
Re: Systematic Redemptions from a Registered Retirement Savings Plan
This is in reply to your letter of January 23, 1996, in which you ask whether we allow systematic redemptions out of a registered retirement savings plan ("RRSP") prior to maturity.
As you point out, subparagraph 146(2)(a)(ii) of the Income Tax Act (the "Act") permits a retirement savings plan to make payments before maturity to the annuitant. These payments are included in the annuitant's income pursuant to subsection 146(8) and paragraph 56(1)(h) of the Act.
You indicate that in the case you are dealing with, the annuitant makes one "redemption request" with respect to 12 monthly payments to be received over the course of a year. The form of the request is not dictated by the Act and whether the annuitant makes 12 separate requests or only one is irrelevant. If, however, you have a question concerning calculation of withholding tax, namely, whether each amount should be considered a "lump sum" as defined in paragraph 103(6)(c) of the Income Tax Regulations, we suggest that you contact the Source Deductions Division of your local tax services office. We trust our comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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