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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Subject: CANADA-U.S. INCOME TAX CONVENTION Section(s): 212(1)(q)]
January 9, 1992
International Tax Programs Financial Industries
Directorate Division
D. S. Delorey
957-8953
7-913290
Attention: R. Power
RRIF Payments to U. S. Residents
This is in reply to your memorandum of November 27, 1991 to which you attached a copy of a draft reply to a XXX concerning RRIF payments to residents of the U. S.
We have no objection to the comments in your proposed letter to XXX except that we would have been inclined to say "over a period of one year or more" rather than "over a one year period".
As we mentioned to you however during our (Douglas/Power) recent telephone conversation, a payment under a RRIF that is otherwise a periodic pension payment could be disqualified as such if proposed amendments to the Income Tax Conventions Interpretation Act are enacted as proposed.
Under the proposed amendments, a payment made after December 20, 1991 that is otherwise a periodic pension payment will be disqualified as such and thus subject to the full 25% Part XIII tax where, with certain exceptions, the total of all payments made under the RRIF at or before the time of the payment and in the year exceeds the greater of
- (a) twice the amount that would be the minimum amount under the fund for the year, and
- (b) 10% of the amount that would be the fair market value of the property held in connection with the fund at the beginning of the year
if all property transferred in the year and before that time to the carrier of the fund as consideration under the fund had been transferred immediately before the beginning of the year and the definition "minimum amount" in paragraph 146.3(1)(b.1) were applicable with respect to all RRIFs.
Since we understand that XXX query relates to RRIF payments to be made after December 20, 1991, we suggest you revise your letter to emphasize the proposed legislation.
for Director
Financial Industries Division
Rulings Directorate
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