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:
Whether bankruptcy amounts to an assignment or surrender of an RRSP or RRIF annuitant's or DPSP beneficiary's rights so as to offend the registration requirements under the Act.
Position TAKEN:
No.
Reasons FOR POSITION TAKEN:
Effect of paragraph 128(2)(a) which deems trustee in bankruptcy to be agent of bankrupt.
XXXXXXXXXX 941543
Attention: XXXXXXXXXX
July 13, 1994
Dear Sirs:
Re: Seizures of Registered Plan Assets by Trustee In Bankruptcy
This is in reply to your letter of June 8, 1994, in which you ask whether the seizure of the property in a registered retirement savings plan (RRSP), registered retirement income fund (RRIF) or deferred profit sharing plan (DPSP) by a trustee in bankruptcy would offend the following provisions of the Income Tax Act: paragraph 146(2)(c) with respect to an RRSP, paragraph 146.3(2)(b) with respect to a RRIF or paragraph 147(2)(e) with respect to a DPSP. (Unless as otherwise stated all references to the Income Tax Act are to the Income Tax Act S.C. 1970-71-72, c. 63 as amended, consolidated to June 10, 1993 - the "Act".) These provisions prohibit the assignment of the retirement income under an RRSP, the assignment of the payments under a RRIF, or the surrender or assignment of any rights or interests of a DPSP beneficiary employee.
Paragraph 128(2)(a) of the Act deems the trustee in bankruptcy to be the agent for the bankrupt notwithstanding that the bankrupt's assets vest with the trustee by operation of the bankruptcy legislation. In a contract of agency, the agent acts on behalf of the principal and there is no change in ownership of any property held by the agent. In our view there is no assignment or surrender of any property, right or interest in an RRSP, RRIF or DPSP on the bankruptcy of the annuitant or beneficiary of the plan because of the agency relationship deemed to exist by paragraph 128(2)(a). Therefore, none of the registration requirements cited in the previous paragraph would be offended.
Although the foregoing comments are an expression of opinion only and are, therefore, not binding on the Department, we trust they are helpful.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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