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: Where an RRSP incurs costs to generate cash to distribute to the RRSP annuitant, will these costs affect the amount to be included in the annuitant's income?
Position: No.
Reasons: The costs are costs of the RRSP trust and they are not included in the annuitant's income. The annuitant only has to include the amount received net of the trust's costs but before withholding taxes in his or her income.
XXXXXXXXXX 2000-003224
M.P. Sarazin
Attention: XXXXXXXXXX
August 30, 2000
Dear Sir\Madam:
Re: Registered Retirement Savings Plan Withdrawals
This is in reply to your E-mail of May 29, 2000, which was forwarded to us by Daniel Desjardins of our Business Publications Division, requesting confirmation that a registered retirement savings plan ("RRSP") annuitant only has to include the gross amount received from his or her RRSP before withholding taxes in his or her income regardless of the fees incurred by the RRSP to generate the cash required to make the cash payment. In particular, you are concerned with the situation where an annuitant requests that the withdrawal proceeds come from the redemption of specific units or shares of a mutual fund and the mutual fund has a "back end load" feature whereby there is a charge for such redemption.
When an RRSP holds shares or units of a mutual fund and incurs costs on the redemption of those units, the costs incurred are expenses of the trust and the payment of such costs by the trust will reduce the amount held in the RRSP that is available for withdrawal.
In any case, an annuitant must include the amount received out of the RRSP, before withholding taxes, in his or her income for the taxation year under the provisions of subsection 146(8) of the Income Tax Act. The value of an amount withdrawn from an RRSP is the fair market value, before withholding taxes, of the property distributed by the RRSP.
Consequently, if the withdrawal is made in cash, the value is simply the amount paid to the annuitant before withholding taxes. The fact that the RRSP trust may have incurred costs on the redemption of mutual fund units or shares will not affect the amount that has to be included in the annuitant's income under subsection 146(8) of the Act. The T4RSP should only reflect the cash payment to the annuitant out of the RRSP before withholding taxes.
We trust that the above comments will be of assistance.
Yours truly,
Patricia Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2000
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2000
Email this Content