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:
Can a taxpayer who is under age 65 and receiving payments from an RRIF claim the pension credit amount, where the funds in the taxpayer's RRIF were transferred to the RRIF from the taxpayer's pension plan.
Position: No.
Reasons:
Payments received by a taxpayer who is under 65 years of age from a RRIF, unless as a result of the death of the taxpayer's spouse or common-law partner, are not defined to be "qualified pension income" and therefore do not qualify for the pension credit under subsection 118(3) of the Act.
April 16, 2003
SUMMERSIDE TAX CENTRE HEADQUARTERS
Wilma Bell Gary Allen
T1 Client Services (613) 952-9853
2003-001158
RRIF Payments - Pension Tax Credit
This is in reply to your memorandum dated March 28, 2003, in which you requested our comments concerning the request by the representative of XXXXXXXXXX, to permit XXXXXXXXXX to claim the pension tax credit in respect of amounts received by XXXXXXXXXX from his registered retirement income fund ("RRIF").
Facts:
1. XXXXXXXXXX retired from the XXXXXXXXXX.
2. At that time, XXXXXXXXXX elected to transfer the commuted value of his pension benefit to a RRIF.
3. XXXXXXXXXX is under 65 years of age and receives a monthly retirement income from his RRIF.
Subsection 118(3) of the Income Tax Act (the "Act") permits a taxpayer to claim a pension credit in respect of certain pension income received in the year to a maximum of $1,000 or the amount received (whichever is less). Where the taxpayer has not attained age 65 by the end of the calendar year, the pension credit may only be claimed if the pension income received is "qualified pension income", as defined in subsection 118(7) of the Act. This is noted in paragraph 7 of Interpretation Bulletin IT-517R.
If the amount is not received in the year as a consequence of the death of the taxpayer's spouse or common-law partner, it will be "qualified pension income" only if it is a payment received in respect of a life annuity out of or under a superannuation or pension plan. As payments out of a RRIF are not payments in respect of a life annuity out of or under a superannuation or pension plan, such payments are not "qualified pension income". There is no discretion under the Act to treat a payment from a RRIF as "qualified pension income", regardless of the origins of the property in the RRIF. Accordingly, where a taxpayer is under the age of 65 and is not receiving an amount from a RRIF as a consequence of the death of the taxpayer's spouse or common-law partner, any amount received from the RRIF will not qualify for the pension credit claim.
We trust that the above comments will be of assistance to you.
For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Customs and Revenue Agency's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the electronic library version, or they may request a severed copy using the Privacy Act criteria, which does not remove client identity. You should make requests for this latter version to Mrs. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
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