28 December 2001 External T.I. 2001-0101085 - TRUSTEE LIABLE FOR PART XI TAX

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: What is the trustee required to do where an RRSP trust has tax exigible in respect of excess foreign property which exceeds the assets of the trust?

Position: The trustee is liable for any shortfall.

Reasons: Subsection 207(2) is clear.

XXXXXXXXXX 2001-010108
P. Kohnen
December 28, 2001

Dear XXXXXXXXXX:

Re: Liability for Tax on Excess Foreign Property

This is in reply to your facsimile submission of September 12, 2001, requesting our views regarding the liability for collecting taxes in respect of excess foreign property held in a registered plan.

The particular circumstances in your letter on which you have asked for our views appears to be a factual situation involving a specific taxpayer. As explained in Information Circular 70-6R4, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. Should your situation involve a specific taxpayer and a completed transaction, you should submit all relevant facts and documentation to the appropriate district taxation office for their views. However, we are prepared to offer the following general comments, which may be of assistance.

The tax on excess foreign content is provided for in subsection 206(2) in Part XI of the Income Tax Act (the "Act"). The tax is payable by any taxpayer described in paragraphs 205(a) to (f) of the Act. Any such tax which is exigible is payable by the trust to which it applies. The plan trustee, as part of their normal fiduciary duties, would typically be expected to remit the payment from trust assets, on behalf of the trust. In accordance with subsection 207(2) of the Act, if the trustee does not remit the full amount of the tax owing within 90 days after the end of the tax year, then the trustee becomes personally liable to pay the tax on behalf of the trust and is entitled to recover the amount it pays from the trust.

During our telephone conversation of October 23, 2001 (XXXXXXXXXX/Kohnen), we advised that if we were provided with complete disclosure concerning the client in question, we would forward the information to the Assessment and Collections Branch for their consideration. A complete disclosure would include:

1. the annuitant name and social insurance number,

2. the plan name and registration number,

3. details as to the assets held by the plan trust,

4. copies of the plan terms (trust deed or contract), and

5. full particulars as to the tax exigible in respect of excess foreign property.

As we have not received the above information, we are writing to advise you that we are closing our file on this matter.

Yours truly,

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