15 April 1992 Income Tax Severed Letter 9205275 - Transfer of Retiring Allowance to RRSP

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.

7-920527
          24(1)                            D.S. Delorey
                                           (613) 957-8953

Attention: 19(1) 
            Consulting Actuary

April 15, 1992

Dear Sir/Madam:

Re: Subparagraph 60(j.1)(ii) Terminated Pension Plan

Your letter of December 4, 1991 addressed to the Registered Plans Division has been referred to this Division for reply.

We note that your letter involves a proposed transaction involving specific taxpayers. As such, it should be the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R2. We offer, however, the following general comments.

In determining the applicable number of years for the purposes of clause 60(j.1)(ii)(A) of the Income Tax Act (the "Act"), a previous employer of an individual will be a "person related to the employer" by virtue of subparagraph 60(j.1)(v) of the Act where service with the previous employer is recognized in determining the individual's pension benefits. Notwithstanding that a current employer's pension plan has been wound up, it is our view that this relationship under subparagraph 60(j.1)(v) of the Act will exist where vested employer contributions have been received by an individual under the plan and service with a previous employer was recognized in determining the amount received by the individual under the plan. The number of years with the previous employer that would count for the purposes of clause 60(j.1)(ii)(A) of the Act would be those years of service with the previous employer that were taken into consideration in determining the amount of the pension benefits.

The above comments also apply for the purposes of clause 60(j.1)(ii)(B) of the Act. That is, the additional $1,500 per year would not be available for any pre-1989 year where an individual had received out of a pension plan an amount that included vested employer contributions in respect of the year.

Our comments are an expression of opinion only and are not binding on the Department as explained in paragraph 21 of Information Circular 70-6R2. We trust, however, that they are of assistance.

Yours truly,

for Director Financial Industries Division Rulings Directorate

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