6 July 2001 External T.I. 2001-0082525 - RRSP WITHDRAWALS & CONTRIBUTIONS

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 withdrawal from an RRSP be repaid to the RRSP in the same year and therefore have no tax consequences?

Position: No

Reasons: The provisions of the Income Tax Act do not permit a withdrawal to be repaid to an RRSP without tax consequences.

XXXXXXXXXX 								2001-008252
G. Allen
July 6, 2001

Dear XXXXXXXXXX:

Re: Registered Retirement Savings Plan ("RRSP") Withdrawals

This is in reply to your letter of April 30, 2001, in which you request an advance income tax ruling to permit you to re-contribute an amount previously withdrawn from your RRSP.

Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request. Where the particular transactions are completed, the enquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following general comments, which may be of assistance.

Subsection 146(8) of the Income Tax Act (the "Act") requires the total of all amounts received by the taxpayer in the year as benefits out of or under RRSPs, other than excluded withdrawals under the Home Buyer's Plan (HBP) and Lifelong Learning Plan (LLP) (as defined in subsection 146.01(1) or 146.02(1)), to be included in the taxpayer's income for the year.

Subsection 146(5) of the Act allows an individual to deduct for a taxation year an amount not exceeding the lesser of two amounts. The first amount is the individual's RRSP deduction limit for the year. The second amount, as determined under paragraph 146(5)(a) of the Act, is the undeducted portion of the individual's post-1990 RRSP contributions made on or before the 60th day of the following year to RRSPs under which the individual is the annuitant. An individual's post-1990 RRSP contributions excludes contributions that were designated for any taxation year under paragraphs 60(j), (j.1) or (l) of the Act. These designated amounts represent additional amounts (e.g. eligible retiring allowance) that may be transferred to an RRSP without affecting the individual's RRSP deduction limit.

An individual's RRSP deduction limit for a particular taxation year is calculated in accordance with the definition of "RRSP deduction limit" under subsection 146(1) of the Act. In general, an individuals' RRSP deduction limit will be determined by the formula:

A+B+R-C
where,

A is the individual's unused RRSP deduction room at the end of the previous year,

B is the lesser of 18% of the individual's earned income from the previous year and $13,500, minus, the individual's pension adjustment from the previous year,

C is the individual's net past service pension adjustment for the year, and

R is the individual's pension adjustment reversal for the year.

All amounts withdrawn from an RRSP in a year, other than excluded withdrawals under the HBP and LLP, must be included in the taxpayer's income in the year the amounts are received. As seen from the above commentary on subsections 146(8), 146(5) and 146(1) of the Act concerning RRSP withdrawals and contributions, there is no provision under the Act which permits an amount withdrawn in a year to be repaid in the year or within 60 days after the end of the year to an RRSP.

We trust the above comments will be of assistance.

Yours truly,

Roberta Albert, CA
For Director
Financial Industries Division
Income Tax Rulings Directorate