4 July 1986 Income Tax Severed Letter 5-1558 - []

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.

XXXX

G.D. Middleton (613) 995-0051 July 4, 1986

Dear XXXX

This is in reply to your letter of May 6, 1986, concerning the amount an individual may contribute to a registered retirement savings plan ("RRSP").

Our understanding of the situation which you describe is as follows: In a prior year, an individual earned the maximum pension enticements under his employer's pension plan since he had reached the maximum number of years of pensionable service. As a result of this, the employer is no longer required to make any contributions to the plan in respect of the individual's employment services rendered in the current year.

In our opinion, the provisions of subparagraph 146(5)(a)(i) of the Income Tax Act (the "Act") would not apply to the individual in the current year. Accordingly, we confirm that such an individual may be entitled to claim a deduction for RRSP contributions in the current and subsequent years within the limits described in paragraph 146(5)(b) of the Act (i.e. the lesser of $5,500 and 20% of his earned income) provided that the other conditions described in subsection 146(5) of the Act do not otherwise restrict the RRSP deduction.

As a matter of interest, we refer you to the Notice of Ways and Means Motion to amend the Income Tax Act dated June 11, 1986 which indicates that the limit on RRSP contributions under paragraph 146(5)(b) of the Act is to be raised to $7,500 for the 1986 and subsequent years. This increased limit may apply to the individual described in the above situation.

We trust our comments will be of assistance to you.

Yours truly,

for Director Financial Industries Division Rulings Directorate Legislative and Intergovernmental Affairs Branch