23 May 2002 Ministerial Correspondence 2002-0136764 - DISPOSITION OF PROPERTY TO AN RRSP

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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Capital gains/losses on disposition of property to an RRSP.

Position: Where a taxpayer disposes of property to their RRSP, any resulting capital gain is included in the taxpayer's income, whereas, any capital loss arising on the disposition is deemed to be nil.

Reasons: Requirement of the Income Tax Act.

May 23, 2002

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable Elinor Caplan, Minister of National Revenue, has asked me to reply to your letter of April 17, 2002, concerning the transfer of property from a non-registered account to a self-directed registered retirement savings plan (RRSP).

When property from a non-registered account is contributed or transferred to an RRSP, a disposition of the property will occur for purposes of the Income Tax Act. The proceeds of disposition and the amount contributed or transferred to an RRSP are equal to the fair market value of the property at the time of the disposition. Any taxable capital gain arising on the disposition must be included in income. However, the Act does not recognize losses arising from certain dispositions, including the disposition of property by a taxpayer to a trust governed by an RRSP, under which the taxpayer, or the taxpayer's spouse or common-law partner is an annuitant or becomes an annuitant within 60 days after the end of the taxation year.

As the Canada Customs and Revenue Agency is responsible for the administration of the Act, and the responsibility for tax policy and changes to the Act falls within the jurisdiction of the Department of Finance, I have forwarded a copy of your letter to Mr. Stephen Richardson, Senior Assistant Deputy Minister of the Tax Policy Branch of that department, for consideration.

I trust my comments will be of assistance.

							Yours sincerely,

							Bill McCloskey
							Assistant Commissioner
							Policy and Legislation Branch  

c.c.: Mr. Stephen Richardson

Senior Assistant Deputy Minister
Tax Policy Branch
Department of Finance
140 O'Connor Street
Ottawa ON K1A 0G5

Gary Allen
2002-013676
952-9853
May 8, 2002