23 November 1988 Income Tax Severed Letter 5-6988 - []

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 R. Nanner (613)957-3494

November 23, 1988

Dear Sirs:

This is in response to your letter of November 1, 1988 concerning certain incentives offered by various financial institutions to promote their registered retirement savings plans (RRSPs).

Lotteries and Other Contests

It is our view that where the prize is won by the RRSP and is deposited directly into the RRSP, there is no advantage to the annuitant within the context of paragraph 146(2)(c.4) of the Income Tax Act.

Low Interest-Rate Loans

We consider a rate of interest on loans for RRSP contributions that is more favourable than the rate offered by the same issuer on non-RRSP loans on similar terms an advantage for the purposes of paragraph 146(2)(c.4). It is therefore a question of fact in each case whether or not an advantage has been extended to a RRSP annuitant as a result of a low interest rate loan.

Bonus Interest

In our opinion, any interest, bonus or otherwise, paid into a RRSP is not an advantage to the annuitant in the context of paragraph 146(2)(c.4) of the Income Tax Act.

Other Incentives

Any incentives offered to the annuitant outside his RRSP would generally result in an advantage resulting in adverse income tax consequences. Examples we have been asked about include the chance to win a trip, free life insurance, and the inducement offer of specific goods ranging from toasters to computers.

This opinion applies even where identical incentives are also offered to the customer to open non-RRSP accounts.

We hope these comments are of assistance to you.

Yours truly,

for Director Financial Industries Division Rulings Directorate