5 October 1994 External T.I. 9407515 - NISA

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.

NISA Administration
P. O. Box 6100
Winnipeg, Manitoba	940751
R3C 3A4		A. M. Brake

Attention: Richard Charron
Executive Director

October 5, 1994

Dear Sirs:

Re: Net Income Stabilization Account ("NISA")

This is in reply to your letter of March 11, 1994 asking for confirmation that transfers become taxable at the time the funds are withdrawn from Fund 2. You feel that when a transfer is made from Fund 2 to Fund 1 the amounts are taxable because the participant has access to all funds in Fund 1. You ask that the appropriate District Taxation Offices be advised accordingly.

We agree with your understanding as set out above since subsection 12(10.2) of the Income Tax Act requires that amounts paid from Fund 2 be brought into income to the extent that such payment exceeds amounts described in "B" of that provision. The fact that the transfer to Fund 1 entitles the participant to withdraw such amounts, in our view, constitutes constructive receipt as if the amount were paid directly to the participant and therefore taxable.

In this regard, the appropriate District Taxation Offices will be advised accordingly.

The foregoing position is not in conflict with the explanations provided in earlier correspondence, copies of which were attached to your letter.

We apologize for the delay in responding.

Yours truly,

R. Albert
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch