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.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: Contributions in Kind to a Registered Pension Plan
This is in reply to your letter of July 27, 1993, which was forwarded to us by the Registered Plans Division of this department. You ask whether employer contributions in kind to a registered pension plan would be considered "eligible contributions" within the meaning of subsection 147.2(1) of the Income Tax Act (the "Act") and deductible under paragraph 20(1)(q) of the Act.
Paragraph 20(1)(q) permits the employer to claim a deduction for an "amount in respect of employer contributions" as permitted by subsection 147.2(1). Subsection 147.2(1) states that an amount which is a contribution to a registered pension plan is deductible provided it meets certain conditions. There is no requirement in either of these provisions that the contribution be in the form of cash and, in our view, such a contribution may be in kind.
There are two other considerations which will affect the employer's ability to make such a contribution, however. Section 8514 of the Income Tax Act Regulations places restrictions on the types of investments a registered pension plan may hold, and the terms of the plan as registered may restrict the employer in the methods it may use to fund the plan.
Lastly, we are currently studying the issue of taxable employee benefits and tax deductions relating to the transfer of treasury shares to various plans identified under the Income Tax Act. We cannot comment, therefore, on this aspect of your letter.
Although the foregoing comments are an expression of opinion only and are not binding on the Department, we hope they are helpful.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate
c.c.: Mr. David Wurtele Registered Plans Division
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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