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: Can an annuitant of a RRIF object to an assessment of Part XI tax?
Position: No.
Reasons: Law. The taxpayer subject to Part XI is the trustee of the RRIF, not the annuitant (Sec. 207). Therefore only the trustee can file a Notice of Objection to the Part XI tax.
Date signed March 22, 2000
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Martin Cauchon, Minister of National Revenue, has asked me to reply to your latest letter dated February 8, 2000 concerning the assessment of the Part XI Income Tax Return filed for the 1998 taxation year of your registered retirement income fund (RRIF) because your RRIF held excess foreign investments during that year.
It is my understanding that you wish the Canada Customs and Revenue Agency (CCRA) to vacate this assessment based upon your assertion that the investments in question, units of XXXXXXXXXX are not foreign property. Since this matter concerns an assessment you have been appropriately dealing with the Calgary Taxation Services office, and Mr. Reid Corrigall, Director of that office, has responded in writing to your questions. Although I can only repeat what has been expressed several times as the CCRA's position, I will do so one last time in order to try and avoid any misunderstandings.
The issue is whether or not units of XXXXXXXXXX held by your RRIF in 1998 constitute foreign property. The Income Tax Act is clear in that paragraph 206(1)(i) thereof defines as foreign property any interest in a partnership, and a limited partnership is a partnership. The prospectus issued by XXXXXXXXXX makes it clear that this is a limited partnership arrangement and this is why the prospectus contained the warning that investments in units will constitute foreign property for RRSP and RRIF purposes.
I note that you were informed by a letter dated October 7, 1999 from Mr. R.G. Burke, Assistant Director, Client Services Division, Calgary Taxation Services office, that the Department of Finance, in its News Release dated January 28, 1999, proposes to exclude the units of certain Canadian-based limited partnerships from being considered foreign property for investment by an RRSP or RRIF. While this change has not yet been enacted into law, it is proposed that it will apply to investments made after 1997. Mr. Burke's letter outlined the general details of the proposed change and suggested that you contact XXXXXXXXXX directly to obtain their opinion on whether or not the change to the law would apply to its units. At this time only XXXXXXXXXX can determine if the criteria in the proposed legislation is met.
One of your arguments is that Interpretation Bulletin IT-90 indicates that limited partnerships are not partnerships. This is not so. The bulletin generally discusses what is a partnership and also describes some arrangements which are not partnerships. However, the non-partnerships described therein are not limited partnerships. I must add that there is no way that the CCRA could conclude that an arrangement, which pursuant to the relevant provincial law is a limited partnership, is not a partnership.
As this issue has been the subject of many letters and we have been repeating the same positions over and over, we are not prepared to continue corresponding on this issue. You have the right to disagree, and your RRIF has the right of appeal as explained to you by Mr. Corrigall.
While this is my final letter on this subject, I do hope it assists in once again explaining our position.
Yours sincerely,
Bill McCloskey
Assistant Commissioner
Policy and Legislation Branch
G. Kauppinen
957-8971
1999-001076
March 20, 2000
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