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.
B. Fioravanti (613)957-8962
July 19, 1988
Dear Sirs:
This is in reply to your letter of June 23 requesting our interpretation of the definition of a retirement compensation arrangement ("RCA") as defined by subsection 248(1) of the Income Tax Act (the "Act"), in connection with an accounting accrual to be made in respect of supplementary pension benefits.
Since the plan appears to be in place, enquiries regarding the application of the Act should be more properly addressed to your local district taxation office. If, on the other hand, the plan is only in the proposal stage, the proper procedure, as set out in Information Circular 70-6R, would be to request an advance income tax ruling. Both procedures would involve the submission of all the relevant documentation and the identity of the parties involved.
However, we are prepared to offer the following general comments which may not necessarily be applicable in your specific fact situation.
With respect to an unregistered pension arrangement, where the accruing pension obligation is recorded as a liability on{the employer's financial statement but there is no segregation of the employer's assets with respect to this specific obligation, it is our view that no actual contributions are being made by the employer to a custodian to fund the arrangement within the meaning of the definition of RCA in subsection 24811) of the Act.
In order to comment on whether an investment contract exists, it would be necessary to examine the agreement to determine whether there is a "debt obligation".
We trust that the foregoing comments, although not binding on the Department, will be of assistance.
Yours truly,
Wayne Douglas
for Director Financial Industries Division Rulings Directorate
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