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:
Reason for trust company refusing to let annuitant cash in investment in RRSP for withdrawal under Home Buyers' Plan.
Position:
Don't know.
Reasons:
Not a result of ITA provisions.
960448
XXXXXXXXXX P. Spice
April 17, 1996
Dear XXXXXXXXXX:
Re: Home Buyers' Plan
This is in reply to your facsimile transmission of January 30, 1996, in which you ask a number of questions concerning the withdrawal of funds from a registered retirement savings plan ("RRSP") in accordance with the Home Buyers' provisions contained in section 146.01 of the Income Tax Act (the "Act").
Your questions relate to your proposal to withdraw funds from two of your RRSPs, both of which are invested in the same product purchased from the same trust company. However, one of the RRSP's is administered by a bank which will permit you to withdraw the funds prior to the investment's maturity date, while the other is administered by the trust company which has confirmed in writing that you may not withdraw the funds prior to the maturity of the investment.
As advised in a telephone conversation of January 31, 1996 (Sarazin/XXXXXXXXXX), we are unable to provide an opinion concerning the particular transaction you are contemplating. We can, however, provide you with a general interpretation of the provisions of the Act respecting withdrawals from RRSPs under the Home Buyers' Plan.
The Act provides that a retirement savings plan is eligible for registration even though it permits a payment to the annuitant before the date on which the retirement income is to commence. If such a payment is made and it is a "benefit" as defined in subsection 146(1) of the Act, the amount is included in the annuitant's income. However, pursuant to subsection 146(8) of the Act, withdrawals of "eligible amounts" under the Home Buyers' Plan are excluded from income.
In addition to the rules in the Act, there are provincial and federal laws respecting pension benefits and investments which dictate the extent to which an individual may deal with investments held within an RRSP.
For example, pension benefits standards legislation may require that property in certain RRSPs (referred to as "locked-in" RRSPs) may not be withdrawn prior to the annuitant reaching a specified age. Please refer to the enclosed pamphlet Home Buyer's Plan - for 1996 Participants at page 5 under "Who can participate?" where this restriction is mentioned (on page 6 of the 1995 version of the pamphlet).
Other laws respecting contracts, banking, insurance and trusts may require that investments, whether held inside or outside an RRSP, may not be cashed in prior to the date specified in the investment documentation or may permit the issuer or institution to impose such restrictions.
With respect to your situation, the bank and trust company are in the best position to explain the reasons why the same type of investment can be withdrawn from one RRSP but not the other prior to the investment's maturity. We can only advise that none of the provisions of the Income Tax Act cause or require this discrepancy in treatment.
Also, please note that a withdrawal under the Home Buyers Plan does not result in the deregistration or collapse of the RRSP. Only if no property is left in an RRSP would the issuer collapse the plan. 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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