9 January 1996 External T.I. 9528685 - RRSP ISSUER INTERPLEADS TO THE COURTS

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:

Where an RRSP Issuer interpleads the property held in an RRSP, would the transfer of property to a court result in an income inclusion to the annuitant?

Position:

No

Reasons:

Not previously dealt with; RRSP Issuer continues to have the right to the property until the court renders its decision. What occurs after the court renders its decision may result in some tax consequences to the annuitant.

		952868
XXXXXXXXXX	M.P. Sarazin

Attention: XXXXXXXXXX

January 9, 1996

Dear Sirs:

Re: Interpleader and RRSP Property

This is in reply to your letter dated October 26, 1995 wherein you requested an opinion regarding the status of a registered retirement savings plan ("RRSP") where an RRSP issuer (the "Issuer") interpleads the property held in an RRSP and seeks a court order discharging it from further liability in a lawsuit between a trust company (the "Trust Company") and the annuitant under the RRSP.

Comments

It appears that the interpretation you seek relates to proposed transactions to be undertaken by specific taxpayers and, therefore, we bring to your attention Information Circular 70-6R2 dated September 28, 1990, and the Special Release thereto issued on September 30, 1992, issued by Revenue Canada, Customs, Excise and Taxation. Confirmation of tax consequences with respect to proposed transactions involving specific taxpayers will only be provided in response to a request for an advance income tax ruling. If you wish to obtain an advance income tax ruling with respect to specific transactions which are contemplated, a written request for an advance income tax ruling can be submitted in accordance with the Information Circular. Nevertheless, we can provide you with the following comments.

Where an Issuer interpleads the property held in an RRSP and agrees to transfer, under the provisions of subsection 146(16) of the Act, such property to an RRSP with the Trust Company in the event that the court decides in favour of the Trust Company, we are of the view that the annuitant would not have to include any amounts in his or her income as a result of such interpleading. Provided that the property is eventually transferred to the Trust Company in accordance with subsection 146(16) of the Act, we are also of the view that the annuitant would not have to include any amount in income should the court request, as result of the interpleading motion, that it hold the RRSP property until its decision is reached.

We trust the above comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch