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:
Can a group RRSP have only one trust or must it have a trust for each annuitant.
Position TAKEN:
Group RRSPs not allowed per Act; Act contemplates one trust per annuitant.
Reasons FOR POSITION TAKEN:
RRSP legislation; various references in 146.
May 10, 1995
HEADQUARTERS HEADQUARTERS
Registered Plans Division D. Duff
Stella Black (613) 957-8953
Director
Attention: David Wurtele
7-950279
Individual Trusts for Group RRSPs
This is in reply to your memorandum of January 30, 1995 wherein you posed the question, "Does the Income Tax Act ("Act") permit a group RRSP to have a single trust, or must each individual RRSP under the group have a separate trust?"
First, a group RRSP, meaning an RRSP with more than one annuitant, is not contemplated in the Act. Subsection 146(1) of the Act defines a retirement savings plan as a contract or arrangement and an RRSP is a retirement savings plan that has been accepted for registration. Various provisions suggest that there can be only one annuitant per RRSP, such as the definitions of annuitant and benefit is subsection 146(1) and the requirement in paragraph 146(2)(b.4) that the plan matures before the end of the year in which the annuitant turns 71 years of age. Since the Act does not provide for a group RRSP in the first place, it cannot be said that the Act does or does not permit a single trust for such an arrangement.
Regarding the second part of your question, the Act does contemplate a separate trust for each annuitant under a trusteed RRSP. Typically RRSPs are insurance contracts, deposits or trusts. A trusteed RRSP is defined in the definition of retirement savings plan in subsection 146(1) of the Act, where it refers to "an arrangement under which payment is make by an individual... in trust to a corporation licensed...to carry on in Canada the business of offering to the public its services as trustee...to be used...by that corporation... for the purpose of providing for the individual... a retirement income". This is the arrangement referred to by various other provisions of the Act when reference is made to a "trust governed by an RRSP".
Subsection 146(4) generally exempts a trust governed by an RRSP from Part 1 tax until the end of the year after the death of the last annuitant. If there was one trust for a number of annuitants a strict interpretation of this provision could extend the tax exempt status well beyond the time intended.
Subsection 146(10) requires the annuitant to include an amount in income where a trust governed by an RRSP acquires a non-qualified investment or allows its property to be used as security for a loan. As you indicated in your memorandum, if there were more than one annuitant, which would be liable for the tax?
Furthermore, a share of an eligible corporation or a share of a small business corporation is a qualified investment for a trust governed by an RRSP pursuant to subsections 4900(6) and (12) respectively, of the Regulations, depending on the relationship between the annuitant and the corporation. These provisions would not be workable if there could be more than one annuitant per trust.
Subsection 146(9) requires the annuitant to include an amount in income where a trust governed by an RRSP disposes of property for less than fair market value or acquires property for more than fair market value. If there were more than one annuitant per trust we would have the same problem as with subsection 146(10).
For these reasons it is our view that the provisions of the Act require a separate trust for each annuitant.
C.B. Darling
Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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