27 April 2000 External T.I. 2000-0005765 - GENERAL RRIF QUESTIONS AND ANSWERS

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:

1. Treatment of administration, investment counsel and management fees paid in respect of a RRIF
2. Effect of a transfer of funds between RRIFs held by the same carrier.

Position:

1. Confirmed our previous position.

2. Explained that the provisions of 146.3(2)(e.1) and/or (e.2) will apply

Reasons:

1. Position previously expressed in several other files.

2. 146.3(2)(e.1) and (e.2) refer to transfers from a "fund" to "another fund" and includes transfers between funds held by the same carrier. Accordingly, the carrier must generally retain enough of the fund to ensure the minimum amount is paid to the annuitant in the year of transfer. However, in certain cases we have accepted that no amount must be retained where the carrier undertakes to ensure the full minimum amount will be paid in the year. (This is an administrative position based on paragraph 47 of IC 78-18R5 which states no form T2033 is required when the RRIFs are with the same carrier.)

XXXXXXXXXX 2000-000576
W. C. Harding
April 27, 2000

Dear Sir:

Re: Registered Retirement Income Funds ("RRIFs")

On November 28, 1999, you wrote to us and asked a number of questions related to RRIFs. We replied to that letter on January 27, 2000. However, on January 30, (apparently before you received our reply), you wrote to us to inquire about the status of your file. In this letter you also asked two additional questions and this letter is in response to those new questions.

First, you referred to our letter of February 13,1998, (our file 970644) which set out our position in respect of RRSP and RRIF fees. You then asked us to confirm that administration, investment counsel and management fees paid in respect of a RRIF can be paid with funds held in the RRIF or paid by the annuitant of the RRIF without any tax consequences and that the annuitant of a RRIF is not allowed a deduction for such fees.

We confirm your understanding.

Second, you indicated that your RRIF is with XXXXXXXXXX and asked if you changed brokers within XXXXXXXXXX, would it result in an RRIF pay-out?

In our response to question three of our letter of January 27, 2000 we explained what occurs when property is transferred from one RRIF carrier to a carrier of another RRIF. These provisions will also apply if one RRIF is replaced by another RRIF with the same carrier However, we have accepted that no amount must be retained where the carrier undertakes to ensure the full minimum amount in respect of the transferor RRIF will be paid to the annuitant in the year of transfer.

We trust the above comments will be of assistance to you.

Yours truly,

Patricia Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate