24 July 1996 External T.I. 9607695 - ADMINISTRATION OF SPOUSAL RRSP

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:

The administration of Spousal RRSP.

Position:

A discussion on the administration of spousal RRSP's by the plan administrartor.

Reasons:

									5-960769
XXXXXXXXXX							Franklyn S. Gillman

Attention: XXXXXXXXXX

July 24, 1996

Dear Sirs:

Re: Spousal Registered Retirement Savings Plan

This is in reply to your letter dated February 27, 1996 wherein you requested clarification concerning spousal plans.

Subsection 146(1) of the Income Tax Act (the "Act") defines a "spousal plan" as, amongst other things, an RRSP to which a taxpayer has, at a time when the taxpayer's spouse was the annuitant under the plan, paid a premium. In addition to a person who is married to the taxpayer, paragraph 252(4)(a) of the Act defines a "spouse" of a taxpayer at any particular time to include a person of the opposite sex who cohabits with the taxpayer in a conjugal relationship and is either the parent of the taxpayer's child or has cohabited with the taxpayer throughout a 12-month period.

The status arises at the time the premium is paid to a spouse's RRSP. Accordingly, when an RRSP receives a contribution from the annuitant's spouse or a transfer from a spousal plan it becomes a spousal RRSP forthwith. One should also note that when an RRSP meets the definition of a "spousal plan", it will not lose this status and any subsequent change in the relationship of the two parties will not affect the RRSP for purposes of the definition in subsection 146(1) of the Act.

The income attribution rule does not apply, however, where at the time an amount is received out of the spousal RRSP, the parties are living separate and apart due to a breakdown of their marriage or, as specified by paragraph 252(4)(b) of the Act, their conjugal relationship. In this case, the annuitant will include the amount received out of the RRSP in income pursuant to subsection 146(8) of the Act. There will be no attribution of income to the person who paid the premium.

The RRSP issuer is required to issue a T4RSP Supplementary to the annuitant of the RRSP with respect to any amounts received out of the RRSP. With respect to a spousal RRSP, the T4RSP should contain (in the appropriate area) the social insurance number (the "SIN") and the name of the contributor spouse, as well as a "yes" in box 24 to identify the plan as a spousal RRSP.

In a situation where the spouses are living separate and apart because of the breakdown of their marriage, at the time of the payment, the additional information concerning the contributor spouse (i.e. name and SIN) is not required. (See "1995 T4RSP and T4RIF Guide", Chapter 3 at the heading "Boxes 24, 36, and 38".)

An RRSP should be administered as it is registered. Please note that questions concerning registration requirements and amendments to the registered plan documents should be directed to the Registered Plans Division of this Department, Room 1806, 25 Nicholas Street, Ottawa, Ontario K1A 0L8, telephone number (613) 954-0419.

The administrator's records should reflect the type of plan it is and be amended to provide for any changes that have occurred to the plan. In our view, the RRSP issuer should maintain records pertaining to the status of a plan as a spousal plan until the plan is deregistered or the contributor spouse or annuitant has died (see explanation of consequences on death below). Spouses may reconcile, even after a divorce, and the income attribution rule could apply again with respect to amounts received out of the RRSP.

If the issuer is satisfied that, at the time an amount is received out of the spousal plan, the contributor and annuitant are no longer living together due to a breakdown of their marriage or conjugal relationship, then the additional information (described above for spousal plans) on the T4RSP slip need not be provided. Satisfactory evidence could include a copy of the decree absolute or separation agreement, but note that documentary evidence is not required by the Act. There is, in any event, no requirement that the issuer accept any proof provided with respect to a marriage/conjugal relationship breakdown. If there is a dispute, it would be acceptable to continue to insert the additional information on the T4RSP slip and request the taxpayers to contact the tax services office should the contributor wish to invoke the exception contained in subsection 146(8.3) of the Act.

With respect to the situation where the contributor spouse dies, the RRSP issuer is free to expunge the spousal plan information from its files since there can be no attribution to the contributor spouse for years following the year of the contributor spouse's death, and for the year of death, paragraph 146(8.7)(a) of the Act provides that the attribution rules do not apply.

With respect to the annuitant's death, the RRSP issuer need no longer maintain the spousal plan information since subsection 146(8.8) of the Act deems the annuitant to have received an amount equal to the fair market value of the (unmatured) RRSP at the time of death, and paragraph 146(8.7)(e) of the Act provides that the attribution rules will not apply to that amount.

We trust this information will assist you. Should you have any questions concerning the guides and information slips relating to registered retirement plans and funds, please contact the T1 Supplementary Guides Division, Client Assistance Directorate of this Department, Ottawa, Ontario K1A 0L8. Questions concerning technical interpretations of the Income Tax Act may be directed to us.

These opinions are our best interpretation of the law as it applies generally. They may, however, not always be appropriate in the circumstances of a particular case. As stated in paragraph 21 of Information Circular 70-6R2 written opinions are not advance rulings and, accordingly, are not binding on the Department.

We trust these comments will be of assistance.

Yours truly,

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