14 July 1994 External T.I. 9415915 - RRSP AS SPOUSAL PLAN

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 designation of RRSP as a "spousal plan" may be changed once divorce has occurred.

Position TAKEN:

No.

Reasons FOR POSITION TAKEN:

Divorce or separation do not affect the status of an RRSP as a "spousal plan".

XXXXXXXXXX 941591

Attention: XXXXXXXXXX

July 14, 1994

Dear Sirs:

Re: Registered Retirement Savings Plan (RRSP) as Spousal Plan

This is in reply to your letter of June 16, 1994, in which you ask whether it is possible to change the designation of an RRSP from a "spousal plan" (defined in paragraph 146(1)(k) of the Income Tax Act) to an RRSP which is not a "spousal plan" where the annuitant and the contributor have divorced. Unless as otherwise stated all references to this statute are to the Income Tax Act S.C. 1970-71-72, c. 63 as amended, consolidated to June 10, 1993 - the "Act".

Paragraph 146(1)(k) of the Act defines a "spousal plan" as, among other things, an RRSP to which a taxpayer has, at a time when the taxpayer's spouse was the annuitant under the plan, paid a premium. In addition to a person who is married to the taxpayer, paragraph 252(4)(a) defines a "spouse" of a taxpayer at any particular time to include a person of the opposite sex who cohabits with the taxpayer in a conjugal relationship and is either the parent of the taxpayer's child or has cohabited with the taxpayer throughout a 12-month period ending before that time.

Once an RRSP meets the definition of a "spousal plan", it does not lose this status. The status arises at the time the premium is paid to a spouse's RRSP; a subsequent change in the relationship of the two parties will not affect the RRSP for purposes of paragraph 146(1)(k) of the Act.

The income inclusion rule under subsection 146(8.3) of the Act does not apply, however, where at the time an amount is received out of the spousal RRSP, the parties are living separate and apart due to a breakdown of their marriage or, as specified by paragraph 252(4)(b) of the Act, their conjugal relationship. In this case, the annuitant will include the amount received out of the RRSP in income pursuant to subsection 146(8) of the Act. There will be no attribution of income to the person who paid the premium.

The RRSP issuer is required to issue a T4RSP Supplementary to the annuitant of the RRSP with respect to any amounts received out of the RRSP. If the spouses are living separate and apart because of the breakdown of their marriage, the additional information concerning the contributor spouse (i.e. name and SIN) is not required. (See "1993 T4RSP and T4RIF Guide", Chapter 8 at Boxes 24, 36 and 38.)

In our view, the RRSP issuer should maintain records pertaining to the status of a plan as a spousal plan until the plan is deregistered. Spouses may reconcile, even after a divorce, and the income attribution rule could apply again with respect to amounts received out of the RRSP.

If the issuer is satisfied that, at the time an amount is received out of the spousal plan, the contributor and annuitant are no longer living together due to a breakdown of their marriage or conjugal relationship, then the additional information on the T4RSP slip need not be provided. Satisfactory evidence could include a copy of the decree absolute or separation agreement, but note that documentary evidence is not required by the Act. There is, in any event, no requirement that the issuer accept any proof provided with respect to a marriage/conjugal relationship breakdown. If there is a dispute, it would be acceptable to continue to insert the additional information on the T4RSP slip and request the taxpayers to contact the district taxation office should the contributor wish to invoke the exception contained in subsection 146(8.3) of the Act.

The foregoing comments are an expression of opinion only and are not binding on the Department. We trust, however, that they are helpful.

Yours truly,
for Director
Financial Industries Division
Rulings Directorate