27 March 2006 Internal T.I. 2005-0142801I7 - RRIF Direct Transfers

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.

Principal Issues: Can all direct transfers of an excess amount from one RRIF to another RRIF, where the same individual is the annuitant under both RRIFs, be transferred under paragraph 146.3(2)(e) of the Act?

Position: Yes.

Reasons: The wording of 146.3(2)(e) would appear to accommodate all such transfers.

								March 27, 2006

	HEADQUARTERS					HEADQUARTERS
	Client Services Directorate			Income Tax Rulings
			  					Directorate
	Attention:  Rick Owen				G. Allen
  								952-9853

								2005-014280

Registered Retirement Income Fund (RRIF) Transfers

This is in reply to your memorandum dated July 15, 2005 wherein you request our views concerning the position of the Client Services Directorate that paragraph 146.3(2)(e) of the Income Tax Act (the "Act") could apply to all direct transfers of property from one RRIF to another RRIF, where the annuitant under both RRIFs is the same individual. Specifically, you request confirmation that we support the position that RRIF to RRIF direct transfers of all or part of an excess amount (the amount above the minimum amount required to be paid out of an RRIF) that may be paid to an annuitant under the terms of an RRIF, can be transferred in accordance with paragraph 146.3(2)(e) as opposed to paragraph 60(l) of the Act.

Our Comments

In general, paragraph 146.3(2)(e) of the Act provides that at the direction of the annuitant the carrier of an RRIF shall transfer all or part of the property held in the RRIF, other than the minimum amount required to be retained by the carrier of the RRIF, to a carrier of another RRIF of the annuitant. In the documentation included with your memorandum, you indicate that it has been the position of the Client Services Directorate that where the annuitant of an RRIF requests a transfer of all of the RRIF property to another RRIF (except the amount retained to ensure payment of the minimum amount), including an excess amount that was contracted to be received, paragraph 146.3(2)(e) will apply. You also mention that this position simplifies the reporting requirements for RRIF transfers.

In your memorandum, you refer to technical interpretation 9626685 that expresses the view that amounts in excess of the minimum amount that may be received out of an RRIF by the annuitant, in accordance with the terms of the RRIF, are considered excess amounts and must be transferred in accordance with subparagraph 60(l)(v) of the Act. Technical interpretation 9626685 further states that amounts that an annuitant is not entitled to withdraw out of an RRIF, under the terms of the RRIF, must be transferred in accordance with paragraph 146.3(2)(e).

We have reexamined the position expressed in technical interpretation 9626685, and are writing to confirm that that position will no longer apply. As a result of our review, we agree that all direct transfers of an excess amount (that is, the amount above the minimum amount required to be paid out of an RRIF), from one RRIF to another RRIF, where the annuitant under both RRIFs is the same individual, could be transferred in accordance with paragraph 146.3(2)(e) of the Act.

In the penultimate paragraph of your memorandum, you note that clause 60(l)(v)(D) of the Act is not the provision that governs the transfer of an eligible amount of a designated benefit where the surviving spouse is the beneficiary of the RRIF property rather than the successor annuitant of the RRIF. As clause 60(l)(v)(B.2) is the provision in the Act that provides for the transfer of an eligible amount in respect of an RRIF (within the meaning assigned by subsection 146.3(6.11)), we would agree with your comment. You then conclude that if we support your position that all RRIF to RRIF direct transfers for the same annuitant, of all or part of an excess amount, can be transferred under paragraph 146.3(2)(e), there is no valid reason to retain clause 60(l)(v)(D). We do not agree with this conclusion. In our view, clause 60(l)(v)(D) is required to accommodate, for example, the direct transfer of an excess amount from an RRIF to a registered retirement savings plan (RRSP) on behalf of an individual who is under 70 years of age and the annuitant under both the RRIF and the RRSP.

For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada 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 copy severed 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
Manager
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch