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: Transfer of RRSP from on trustee to another - foreign property transferred first.
Position: Subject to the provisions of subsection 206(2), however administrative relief may apply.
Reasons: Where all the property of the RRSP has been transferred and the remaining Canadian property is transferred in the month immediately following the transfer of the foreign property, administrative relief from the penalty may be provided.
2002-012185
XXXXXXXXXX Karen Power, CA
(613) 957-8953
February 25, 2002
Dear XXXXXXXXXX:
Re: Excess Foreign Content Due to Timing of Transfer
This is in reply to your facsimile of February 4, 2002, requesting our views as to whether the Canada Customs and Revenue Agency (the "CCRA") will provide administrative relief in the application of subsection 206(2) of the Income Tax Act (the "Act") in the situation where an annuitant under a registered retirement savings plan ("RRSP") changes financial advisors and only the foreign property held in the former RRSP gets transferred to the new RRSP prior to the end of a month.
Subsection 206(2) of the Act provides that, where at the end of any month after 2000 the total cost amount of foreign property exceeds generally 30% of the cost amount of all property held at that time, the taxpayer is subject to a tax of 1% of the lesser of the excess and the total of the cost amounts of all foreign properties acquired after June 18, 1971.
In our opinion, the new RRSP would be subject to the excess foreign property tax to the extent that its foreign property exceeded the thresholds as set out in subsection 206(2) of the Act. The Canadian investments which were not owned by the new RRSP by
month-end would not be included in the total of all property for purposes of the calculation. Whether or not an investment is owned by the new RRSP at month-end for purposes of Part XI of the Act is a question of fact.
However, it is our understanding that administrative relief may be provided where the remaining Canadian assets are transferred in the month immediately following the transfer of the foreign property. Such relief would only be provided where all of the property within the existing RRSP is transferred. If you require assistance with a particular factual situation, you may wish to contact the Pension and Trust Section of the Individual Returns and Payments Processing Directorate, Vanier Tower C, Vanier, Ontario, K1A 0L5.
We trust our comments will be of assistance to you. These comments are provided in accordance with the practice outlined in paragraph 22 of Information Circular 70-6R4.
Yours truly,
Mickey Sarazin, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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