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 investment in CCPC be transferred from one RRSP to another?
Position: Provided that the transfer meets the conditions in paragraph 146(16)(a), it could be transferred. However, if the investment is not a qualified investment under paragraph 4900(6)(a) or 4900(12(a) of the Regulations, subsection 146(10) would apply.
Reasons: The transfer of investment would be an acquisition of investment by second trust governed by an RRSP.
XXXXXXXXXX 2009-032192 Andrea Boyle, CGA
(613) 957 8971
February 17, 2010
Dear XXXXXXXXXX :
Re: Transferring an Investment from one Registered Retirement Savings Plan (RRSP) to another RRSP
This is in reply to your letter of May 1, 2009 regarding an investment in a Canadian Controlled Private Corporation (CCPC) which you wish to transfer from one RRSP to another existing RRSP.
The particular situation outlined in your letter appears to relate to a factual one, involving a specific taxpayer. Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. We are, however, prepared to offer the following general comments, which may be of assistance.
All statutory references in this letter are references to the provisions of the Income Tax Act, R.S.C. 1985 (5th supp.) c. 1, as amended ("Act").
Subsection 146(16) permits the transfer of amounts from an RRSP before the maturity of the plan. Paragraph 146(16)(a) allows an unmatured RRSP to transfer on behalf of the annuitant ("transferor") any property to another RRSP or a registered retirement income fund under which the transferor is the annuitant, or to a registered pension plan for the benefit of the transferor. In such a case, there will be no amount included in the annuitant's income for tax purposes in respect of the transfer.
The property that may be held by the trust governed by an RRSP (commonly referred to as a self-directed RRSP) is restricted to a "qualified investment" within the meaning assigned by subsection 146(1). There are circumstances where an investment that satisfies the conditions to be a qualified investment at the time that it was initially acquired by a trust governed by a RRSP will continue to be a qualified investment when, at a later date, all of the conditions are no longer met.
However, in our view, when an investment is transferred from one trust governed by a RRSP to another trust governed by an RRSP, the transferee trust is acquiring the property on that transfer date. Since the investment is being acquired, the investment must be, at the time of transfer, a qualified investment for the trust governed by the transferee RRSP.
If the investment is not a qualified investment when the transferee acquires it, subsection 146(10) requires that the fair market value of the investment be included in computing the annuitant's income for the year the investment is acquired.
The Canada Revenue Agency's (CRA) Interpretation Bulletin IT-320R3 Qualified Investments - Trusts Governed by Registered Retirement Savings Plans, Registered Education Savings Plans and Registered Retirement Income Funds discusses the situations where shares of private corporations will be qualified investments for a trust governed by an RRSP (IT-320R3 paragraphs 6 to 9). This Interpretation Bulletin is available on the CRA Web site at
http://www.cra-arc.gc.ca/E/pub/tp/it320r3/README.html.
We trust that these comments will be of assistance.
Yours truly,
Louise J. Roy
Manager
for Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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