23 February 1994 External T.I. 9404225 - HAA7209-1

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.

RULINGS DIRECTORATE
CORRESPONDENCE SUMMARY

DOCUMENT TYPE:

Opinion

Principal Issues:

Is a payment under an annuity acquired under a DPSP an annuity payment or a DPSP payment.

Position TAKEN:

It is an annuity payment

Reasons FOR POSITION TAKEN:

Department position as expressed in RRSP and other deferred Plans guide.

LEGAL:

FINANCE OPINION:

JURISPRUDENCE:

RCT PUBLICATIONS:

Page 40 1993 RRSP and Other Registered Plans for Retirement Guide

HAA NUMBER:7209-1

XXXXXXXXXX 7-940422

Attention: XXXXXXXXXX

February 23, 1994

Dear Sirs:

Re: Reporting of payments from annuities acquired from Deferred Profit Sharing Plans ("DPSP")

This is in reply to your letter of January 14, 1994, referred to us for reply by our Source Deductions Division on February 17, 1994.

As discussed by telephone on February 21, 1994, (Harding- XXXXXXXXXX) the Department's position on the treatment of payments out of an annuity acquired under the terms of a DPSP are set out on page 40 of the "1993 RRSP and Other Registered Plans for Retirement Guide" as follows:

"If the DPSP trustee transfers your DPSP payments to a person licensed to carry on an annuities business in Canada to purchase an annuity for you, the resulting annuity payments are not payments from a DPSP. In such cases, you cannot transfer any part of the annuity payments to your spouse's RRSP."

Accordingly, and in reply to your concerns on reporting of amounts paid out of an annuity acquired in accordance with sub-paragraph 147(2)(k)(vi) of the Income Tax Act (the "Act"), these amounts should be reported in box 24 of form T4A and included in the recipient's income in accordance with paragraph 56(1)(d) of the Act. No deduction is available under paragraph 60(a).

The above comments are based on our understanding of the law as it applies in general and may or may not apply to the circumstances of a particular case. They do not form an advance income tax ruling and they are not binding on the Department.

Yours truly,

for Director
Financial Industries Division
Rulings Directorate