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 amounts held in a RRSP are contributions for the purposes of the def of "qualifying trust" under subsection 127.4(1)?
Position TAKEN:
It is question of facts whether amounts held in a RRSP are contributions.
Cannot be reasonably attributed to a contribution where the amount can be traced to income. Administrative policy if impossible to trace funds in a RRSP to contribution.
Reasons FOR POSITION TAKEN:
See 5-943324
5-950426
XXXXXXXXXX Robert Gagnon
Attention: XXXXXXXXXX
March 23, 1995
Dear Sirs:
Re: Qualifying Trusts
This is in reply to your letter of February 6, 1995 wherein you requested a technical interpretation concerning the definition of a qualifying trust under subsection 127.4(1) of the Income Tax Act («Act»).
The Department has adopted the view that a registered retirement savings plan («RRSP») will be a qualifying trust under subsection 127.4(1) of the Act for an individual in respect of a share of a prescribed labour-sponsored venture capital corporation ("LSVCC") if contributions to the RRSP made by the individual in a year or a preceding year (and no other funds) are used to acquire or subscribe for the share, and the annuitant of the RRSP is the individual or a spouse of the individual.
It is a question of fact whether amounts held in a RRSP are contributions. In our view, an amount cannot be reasonably attributed to a contribution to a RRSP where the amount can be traced to income earned by the RRSP.
Where it is impossible to trace which part of the funds in a RRSP is reasonably attributable to contributions to the RRSP or income on these contributions, the Department is prepared to accept that an amount of money not exceeding the total contributions to the RRSP be considered contributions to the RRSP for the purposes of the definition of qualified trust under subsection 127.4(1) of the Act.
The foregoing opinion is not a ruling and, in accordance with the guidelines set out in Information Circular 70-6R2 dated September 28, 1990, is not binding on the Department.
We trust our comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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