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Principal Issues: RRIF funds withdrawn in error still taxable
Position: Yes
Reasons: Regardless of error by broker - broker withdrew funds to purchase non-qualified investment instead of following annuitant's instructions to purchase non-qualified investment inside RRIF - consequences are that annuitant is taxable on RRIF withdrawal.
Signed on August 24, 1999
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Dear XXXXXXXXXX:
The Honourable Martin Cauchon, Minister of National Revenue, has asked me to reply to your letter addressed to the Honourable Paul Martin, Minister of Finance, concerning your registered retirement income fund (RRIF). Mr. Martin sent a copy of your letter to Mr. Cauchon's predecessor, the Honourable Herb Dhaliwal, on June 22, 1999.
As previously confirmed in my letter to you of February 10, 1999, the Income Tax Act requires that an amount withdrawn in a year from your registered retirement income fund (RRIF) be brought into your income and taxed in that year. Since funds were withdrawn from your RRIF, placed in your personal trading or non-registered account and used to invest in a Japan index call option, Revenue Canada must assess the tax accordingly.
I trust my comments explain the Department's position on this matter.
Yours sincerely,
Bill McCloskey
Assistant Deputy Minister
Policy and Legislation Branch
P. Spice
957-8979
July 21, 1999
991944
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