10 July 2013 Internal T.I. 2013-0478851I7 - Earned income for RRSP purposes

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 Earnings Loss Benefit Payments and XXXXXXXXXX received by a taxpayer are considered earned income for RRSP purposes.

Position: Yes, provided the amounts are included in income from an office or employment.

Reasons: Where the ELB and XXXXXXXXXX payments received by taxpayers are included in income from an office or employment, they are considered earned income by reason of subparagraph (a)(i) of the definition of "earned income" in subsection 146(1) of the Act

XXXXXXXXXX
2013-047885

July 10, 2013

Dear XXXXXXXXXX:

Re: Earned Income for RRSP purposes

This is in response to your recent question regarding whether an Earnings Loss Benefit ("ELB") payment or a XXXXXXXXXX payment received by a XXXXXXXXXX is considered "earned income" for Registered Retirement Savings Plan ("RRSP") purposes. You are concerned that ELB payments and XXXXXXXXXX payments may not be considered earned income for RRSP purposes primarily because recipients may not be current employees of the XXXXXXXXXX.

Based on a review of the program documents, an ELB payment provided under the XXXXXXXXXX, generally provides income replacement payments to eligible Individuals, taking part in a XXXXXXXXXX rehabilitation or vocational assistance program. ELB payments can continue until an Individual reaches the age of 65, if the Individual remains disabled. The XXXXXXXXXX is a group disability insurance plan that also guarantees disabled Individuals replacement income if they become totally disabled or if they are released from the XXXXXXXXXX for other medical reasons. The XXXXXXXXXX plan generally guarantees Individuals replacement income protection on release from the XXXXXXXXXX for a minimum of XXXXXXXXXX years and can, in some cases, continue until the Individual reaches age 65.

Earned income for RRSP purposes is defined under the Income Tax Act (the "Act") to include, for a period in the year throughout which a taxpayer was resident in Canada, the taxpayer's income from an office or employment.

The value of any benefits received or enjoyed by a taxpayer in the year in respect of, in the course of, or by virtue of an office or employment are to be included in the taxpayer's income from an office or employment. It is Canada Revenue Agency's (the "CRA") position that the broad wording of this provision means that a taxable benefit may exist where there is any connection between a particular payment or benefit and the particular office or employment. In numerous instances the CRA has taken the position that a former employee can also receive a benefit in respect of an office or employment. Accordingly, where the ELB and XXXXXXXXXX payments provided to Individuals are included as income from an office or employment under paragraphs 6(1)(f.1) and 6(1)(f) of the Act, respectively, these amounts would be considered "earned income" for RRSP purposes.

We trust these comments will be of assistance to you.

Yours truly,

Lita Krantz CPA, CA
for Director,
Deferred Income Plans, Section II
Financial Industries and Trust Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

c.c. XXXXXXXXXX