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 Gord Dixon (613) 995-2455
June 28, 1983
Dear Sirs:
This Is in reply to your letter of June 13, 1983 requesting our views with respect to a self-directed RRSP. You have generally described the situation where, instead of simply withdrawing funds from a self-directed RRSP, the annuitant makes a loan to himself at commercial interest rates in order to obtain the use of the cash held in the plan.
As stated by you, the result of the arrangement is that the RRSP will have acquired non-qualified property under subsection 146(10) of the Income Tax Act and the annuitant shall include the fair market value of the non-qualified property in his income for the year. When the loan is repaid in the future, an offsetting deduction, by virtue of subsection 146(6) of the Act, would be available to the annuitant which would also reduce the maximum contribution for that year which would have otherwise been available under subsection 146(5).
In addition to the obvious results indicated above, where the arrangement could be construed as conferring an advantage to the annuitant, other than the exemption listed in paragraph 146(2)(c.4) of the Act, that is conditional in any way on the existence of the RRSP, such a plan would not be registered by this Department. Subsection 146(13.1) would operate to "de-register", as contemplated by subsection 146(12), any plan which was a registered plan and which offered an advantage to the annuitant that was not contained in subparagraph 146(2)(c.4). It is therefore possible, depending on the circumstances, that such an arrangement would cause the de-registration of the plan with the consequent results provided for within subsection 146(12) of the Act.
We trust our comments will be of assistance.
Yours truly,
for Director Non-Corporate Rulings Division GD:ta 146(2)
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