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: Whether a withdrawal from a spousal or common law partner RRSP qualifies as a "qualifying withdrawal" for purposes of PSPA certification?
Position: yes
Reasons: As long as a member is the annuitant of the RRSP and all the other conditions are met in subsection 8307(3) of the Regulations
XXXXXXXXXX
2012-046996
P. Tsang
February 21, 2013
Dear XXXXXXXXXX,
Re: PSPA Qualifying Withdrawals
This is in reply to your correspondence of November 6, 2012, in which you asked whether a withdrawal from a spousal or common-law partner RRSP would qualify as a "qualifying withdrawal" for the purpose of certifying a past service pension adjustment ("PSPA").
Our Comments
Your letter is describing a factual situation involving a specific taxpayer. As explained in Information Circular 70-6R5, it is not our practice to comment on the tax consequences applicable to a specific taxpayer in particular circumstances except in the form of an advance income tax ruling. We can, however, offer the following general comments.
Information regarding PSPAs may be found in T4104 Past Service Pension Adjustment Guide, which is available on our website:
(http://www.cra-arc.gc.ca/E/pub/tg/t4104/README.html).
All PSPAs that are greater than nil and that do not meet the conditions for exemption must be certified by the Canada Revenue Agency ("CRA"). Generally, PSPA certification depends on the member's unused RRSP deduction room at the end of the previous year. If the PSPA exceeds the available RRSP room by more than $8,000, the member may have to withdraw the excess from his or her RRSP as a qualifying withdrawal in order to have the PSPA certified.
While there are several conditions to be met in order for a withdrawal to be a qualifying withdrawal, there is no restriction against making the withdrawal from a spousal or common-law partner RRSP as long as the member is the annuitant of the RRSP.
RPP members considering using funds in a spousal or common-law partner RRSP to support a PSPA certification need to be aware of the special income attribution rules that may apply. Generally, funds withdrawn from a spousal or common-law partner RRSP are required to be included in the income of the contributor (and not the annuitant) if they are withdrawn in the year the contribution is made or in the following two calendar years.
While we hope that our comments will be of assistance to you, they are given in accordance with the practice referred to in paragraph 22 of IC 70-6R5 and are not binding on the CRA in respect of any particular situation.
Yours truly,
Mary Pat Baldwin, CA
For Director
Financial Industries and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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