5 July 1994 Internal T.I. 9414657 - ORDER OF RRSP WITHDRAWALS

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.

Principal Issues:

Is there an order of the withdrawal of prohibited contributions;

Position TAKEN:

no

Reasons FOR POSITION TAKEN:

legislation

				July 5, 1994

	KITCHENER DISTRICT OFFICE		HEAD OFFICE
	Client Assistance		Rulings Directorate
D. Duff
	Attention: Wayne Rush		(613) 957-8953

7-941465

RRSP withdrawals

This is in reply to your memorandum of May 31, 1994 and further to our telephone conversation (Rush/Duff) of May 27, 1994, regarding the ordering of withdrawals of contributions to an RRSP.

In your situation a taxpayer made a series of contributions to his RRSP during the period commencing December 2, 1992 and ending on March 1, 1994. He also withdrew an amount after March 1, 1993 and before March 2, 1994 under the RRSP Home Buyers' Plan. This would have resulted in an income inclusion pursuant to subsection 146.01(10) of the Act to the extent of the lesser of these contributions and the withdrawal. The taxpayer partially reduced the income inclusion by withdrawing some of his contributions and intends on leaving the balance in the RRSP and including it in income pursuant to subsection 146.01(10) and taking a deduction pursuant to subsection 146(5) of the Act.

As the contributions have been made over three calendar years they are partially deductible in each of the three years. You questioned whether there was any required order to the withdrawal of the contribution or could the taxpayer arbitrarily determine which contributions were being withdrawn and, consequently, which year the deductions pursuant to subsection 146(5) of the Act would be taken. Subsection 146.01(12) permits the taxpayer to reduce the amount to be included in income pursuant to subsection 146.01(10) by withdrawing amounts from his RRSP before the end of 1994 and including them in his income pursuant to subsection 146(8) of the Act. There is no reference to any ordering of the withdrawals made under this provision.

Where such withdrawals are made, the amounts may be deducted under subsection 146(8.2) of the Act, provided they were not already deducted under subsection 146(5) of the Act. To be deductible under subsection 146(8.2), such premiums must be withdrawn in the year of payment, the year in which a notice of assessment was issued for the year of payment, or the year following either of these years. Consequently, the premiums paid in December 1992 could be withdrawn in 1994 and deducted pursuant to 146(8.2). There is no specific ordering required for subsection 146(8.2) of the Act, however, the amounts withdrawn should reasonably be regarded as the undeducted premiums.

for Director
Financial Industries Division
Rulings Directorate