8 November 2000 External T.I. 2000-0048725 - RRSP ROLLOVERS FOR NON-RESIDENTS

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 a non-resident use the provision of paragraph 60(l) of the Act to rollover a refund of premiums without withholding tax?

Position: Yes, if the requirements of paragraph 60(l) and 212(1)(l) of the Act are met.

Reasons: Our position on rollovers for non-residents is outlined in paragraphs 28 - 31 of IT-500R RRSPs - Death of an Annuitant.

XXXXXXXXXX 2000-004872
S. E. Thomson
Attention: XXXXXXXXXX

November 8, 2000

Dear XXXXXXXXXX:

Re: Non-residents as beneficiaries of an RRSP

This is in reply to your letter of September 21, 2000 in which you ask us if the provisions of paragraph 60(l) of the Income Tax Act (the "Act") are available to a particular non-resident. Specifically, an annuitant of an RRSP is deceased, leaving her husband as the beneficiary of the RRSP. The husband is a US resident and citizen, and has never lived or worked in Canada.

We are unable to definitively reply to such queries except where they relate to a factual situation and we have had the opportunity of reviewing all the facts and related documentation. Such a review is conducted by the relevant tax services office where the query relates to a completed transaction, or by this office where the arrangement is the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R3 Advance Income Tax Rulings. We nevertheless offer the following general comments. Since these comments may or may not be relevant in your situation, they are not binding on the Canada Customs and Revenue Agency (the "Agency").

The Agency's general position with regard to the tax treatment of payments out of a registered retirement savings plan (an "RRSP") made on or after the death of an annuitant are set out in Interpretation Bulletin IT-500R RRSPs - Death of an Annuitant. In paragraph 31 of IT-500R, we have stated that the rollovers available under paragraph 60(l) of the Act are available to a non-resident beneficiary who is either the spouse or a financially dependent child or grandchild, without Part XIII tax being applicable, if all the requirements of paragraph 212(1)(l) of the Act are met.

The requirements of paragraph 212(1)(l) of the Act are generally outlined in paragraph 31 of IT-500R, and require that payments made out of or under an RRSP to a non-resident are generally subject to withholding tax under Part XIII of the Act, unless the amount is

• directly transferred to an RRSP under which the non-resident is the annuitant,
• used to acquire an annuity described in subparagraph 60(l)(ii) of the Act under which the non-resident is the annuitant, or
• transferred to a RRIF under which the non-resident is the annuitant, and

the amount would be deductible under paragraph 60(l) of the Act if the non-resident was resident in Canada.

In general, paragraph 60(l) of the Act permits a qualifying beneficiary (e.g. a spouse) who receives a "refund of premiums" from an RRSP, to defer the payment of tax (rollover) by transferring all or part of the refund of premiums to an RRSP, certain annuities, or a RRIF, under which the qualifying beneficiary is the annuitant. A "refund of premiums" is defined in subsection 146(1) of the Act, and is generally an amount paid out of an RRSP to a spouse or a financially dependent child or grandchild of the annuitant upon the death of the annuitant. Please refer to paragraphs 27 and 28 of IT-500R for more information on the rollover provisions available under paragraph 60(l) of the Act.

Whether or not the husband has US tax consequences on the rollover should be confirmed by reference to the US tax rules, and the Canada-United States Income Tax Convention, 1980.

We trust that our comments will be of assistance.

Yours truly,

R. Albert
for Director
Financial Industries Division
Income Tax Rulings Directorate