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:
T4RSP reflect LSVCC redemption amount before or after clawback?
Position:
After clawback
Reasons:
Clawback is cost to holder of share being redeemed and annuitant only has to include amount actually received out of RRSP in income.
960661
XXXXXXXXXX M.P. Sarazin
Attention: XXXXXXXXXX
April 29, 1996
Dear Sirs:
Re: Labour Sponsored Venture Capital Funds
This is in reply to your letter dated February 7, 1996, wherein you requested our comments regarding the amount that has to be reported on a T4RSP Supplementary when an annuitant withdraws funds from a registered retirement savings plan ("RRSP") and the funds are from an early redemption of Class A shares of a Labour Sponsored Venture Capital Corporation ("LSVCC"). You are uncertain as to whether the T4RSP Supplementary should reflect the redemption value before or after the clawback of the tax credits associated with the particular LSVCC Class A shares.
Under the provisions of subsection 6706(3)(a) of the Income Tax Regulations, the LSVCC is required to withhold and remit an amount on behalf of the holder of the Class A shares and the holder of the Class A shares is the RRSP. Consequently, the clawback represents a cost of the RRSP. Under the provisions of subsection 146(8) of the Income Tax Act, a taxpayer only has to include the amounts received out of the RRSP in his or her income. Therefore, the net amount received by the taxpayer should be reported on the T4RSP Supplementary.
We trust the above comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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