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 transfer be made from an individual's DPSP to his or her ex-spouse's registered plan on marriage breakdown?
Position: No. However, an individual may transfer property from their DPSP to their RRSP and then transfer property to their ex-spouse's RRSP.
Reasons: The Act does not permit a direct transfer. However, 147(19), 147(20) and 146(16) permit an indirect transfer.
XXXXXXXXXX 2001-008810
G. Allen
July 17, 2001
Dear XXXXXXXXXX:
Re: Transfer from a Deferred Profit Sharing Plan (DPSP)
to another Registered Plan on Marriage Breakdown
This letter is in reply to your letter dated June 6, 2001 concerning the above-referenced issue.
Subsection 147(19) of the Income Tax Act (the "Act"), does not permit a transfer from an individual's DPSP to another registered plan (e.g. a registered retirement savings plan (RRSP)) of the individual's spouse or common-law partner or former spouse or former common-law partner on the breakdown of their marriage or common-law partnership. Although a direct transfer under subsection 147(19) is not possible on marriage or common-law partnership breakdown, an indirect transfer, as described below, will accomplish the same result.
Interpretation Bulletin IT-528, entitled "Transfers of Funds Between Registered Plans", (available at your local tax services office or on the internet at www.ccra-adrc.gc.ca/formspubs/menu-e.html) provides the Canada Customs and Revenue Agency's (CCRA) views concerning transfers between registered plans. Transfers from DPSPs are discussed in paragraphs 1 to 4 of IT-528. Paragraph 2 of IT-528 states that a member of a DPSP may have a lump-sum amount that is otherwise payable to him transferred to an RRSP of which he is the annuitant in accordance with the provisions of subsection 147(19) of the Act. When this occurs subsection 147(20) of the Act will apply to prevent the inclusion of the amount in the member's income solely because of the transfer and the taxpayer may not claim a deduction in respect of the transferred DPSP amount.
Paragraph 5 of IT-528 states that a direct transfer under subsection 146(16) of the Act from one spouse's unmatured RRSP to the other spouse's or former spouse's RRSP may occur provided that the spouses are living separate and apart and the transfer between RRSPs is made under a decree, order or judgment of a competent tribunal, or under a written separation agreement relating to the division of property between the transferor and the transferor's spouse or former spouse in settlement of rights arising out of, or on the breakdown of, their marriage.
Although IT-528 does not refer to transfers involving common-law partners, in general, CCRA published positions in respect of spouses should now extend to common-law partners and common-law partnerships unless specifically over-ridden by a more recent publication.
Form T2220 should be used to transfer property under subsection 146(16) of the Act on the marriage breakdown.
We trust the above comments will be of assistance.
Roberta Albert, CA
For Director
Financial Industries Division
Income Tax Rulings Directorate
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