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:
Ruling request on whether Part XI and XI.1 will apply to a segregated fund that is an RRSP
Position TAKEN:
Opinion that it does not but refuse to rule on issuance of new products.
Reasons FOR POSITION TAKEN:
Parts XI and XI.1 apply to trusts.
3-942549
XXXXXXXXXX D. Duff
Attention: XXXXXXXXXX
October 21, 1994
Dear Sirs:
Re: XXXXXXXXXX
This is in response to your letter of September 27, 1994, requesting an advance income tax ruling on behalf of XXXXXXXXXX regarding a proposed policy, XXXXXXXXXX which they intend on introducing.
The policy will be a contract defined in paragraph (a) of the definition of retirement savings plan in subsection 146(1) of the Income Tax Act ("Act"). It will be a life insurance policy as defined in subsection 138(12) of the Act and will be a segregated fund and a segregated fund policy as defined in subsection 138.1(1) of the Act. It will be issued or effected as a registered retirement savings plan ("RRSP") within the meaning of subsection 138.1(7) of the Act.
You requested a ruling that Parts XI and XI.1 would not apply to the proposed policy. We do not issue ruling with respect to the issuance of new products, however, we can make the following general comments.
Where a segregated fund is created, paragraph 138.1(1)(a) of the Act deems, for the purposes of Part I, an inter vivos trust to be created. Section 205 of the Act states that Part XI of the Act applies to, among other persons, a trust governed by an RRSP. Subsections 207.1(1), (2) and (4) levies a tax under Part XI.1 on, respectively, trusts governed by RRSPs, deferred profit sharing plans, and registered retirement income funds. Neither Parts XI or XI.1 apply to a segregated fund and the deeming provision in subsection 138.1(1) does not deem a segregated fund to be a trust for the purposes of Part XI and XI.1.
We trust this is satisfactory.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
Policy and Legislation Branch
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