18 June 1992 Income Tax Severed Letter 9217475 - Indians and RRSPs

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: INDIANS AND RRSP'S SECTION: 81(1)(a), 56(1)(h)]

921747
Glen Thornley
(613) 957-2101

June 18, 1992
Dear Sirs:

Re: Status Indians and Registered Retirement Savings Plans "RRSP"

This is in reply to your letter of April 23, 1992 addressed to the Enquiries Section of the Toronto District Taxation Office which was sent to us for reply. In your letter you set out four questions relative to the receipt by a status Indian of payments under an RRSP.

As discussed in our telephone conversation of June 10, 1992 (Thornley/19(1)), the answer to all four questions is that any payment under an RRSP, in the circumstances of those questions, is taxable. Such payments are not covered by the Indian Remission Order as the Order refers only to a superannuation or pension benefit under a registered pension fund or plan. An RRSP is a savings plan not a superannuation or pension plan or fund. Additionally payments under an RRSP are sourced at the head office of the financial institution that issued them and are, therefor, not sourced on a reserve unless, of course, the head office of the financial institution (credit union, trust company, etc) happens to be situated on a reserve. Where this is the case the RRSP payments would be considered as personal property of an Indian on a reserve and exempt from taxation by virtue of section 87 of the Indian Act and paragraph 81(1)(a) of the Income Tax Act.

The foregoing represents the Department's present understanding of the law and does not take into consideration the recent decision of the Supreme Court of Canada in the Glenn Williams case (92 DTC 6320). This decision may call into question the rationale for the earlier decision of the Supreme Court in Nowegijick. However, the impact of Glenn Williams on these issues is under review by the Departments of Justice and Finance, as well as by this Department. We anticipate this review will take some time to complete. In the meantime the Department's position on the taxation of Indians will be maintained except in cases similar to Glenn Williams (i.e. unemployment insurance benefits received by a status Indian where the qualifying employment income was exempt under the Indian Act.)

Yours truly

E. Wheeler
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch

• c. c. N. Kelly, A/Chief Head Office Assessment of Returns Directorate
• c. c. Current Amendments & Regulations Division