30 November 1995 Ruling 9621433 - rpp deduction, privatization

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:

Can deductions be made for contributions to an RPP for benefits accrued while XXXXXXXXXX was tax exempt XXXXXXXXXX rpp?

Position:

Yes

Reasons:

Specifically allowed under 147.2(2) even though this situation was not contemplated when the legislation drafted.

XXXXXXXXXX							962143
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1996

Dear Sirs:

Re: Advance Income Tax Ruling
XXXXXXXXXX

This is in reply to your letter dated XXXXXXXXXX, wherein you requested an advance income tax ruling on behalf of the aforementioned corporation. We also acknowledge the information provided during our various telephone conversations (XXXXXXXXXX).

Our understanding of the facts and proposed transactions is as follows:

Facts

XXXXXXXXXX Pursuant to paragraph 149(1)(d) of the Income Tax Act (the "Act"), XXXXXXXXXX is exempt from taxation under Part I of the Act on its taxable income.

XXXXXXXXXX Effective XXXXXXXXXX, and substantially all of its assets were transferred to XXXXXXXXXX

XXXXXXXXXX

The Existing Plan is a registered pension plan as defined under the Act. XXXXXXXXXX The Existing Plan which is a defined benefit pension plan for purposes of the Act allows for the transfer of funds and liabilities which have accumulated with respect to a particular employee or former employee to another plan established for the benefit of the employee, provided that certain formalities are satisfied.

XXXXXXXXXX

XXXXXXXXXX

XXXXXXXXXX

Proposed Transaction

XXXXXXXXXX will cease to be exempt from taxation under Part I of the Act on its taxable income.

XXXXXXXXXX proposes to establish a new registered pension plan (the "New RPP") XXXXXXXXXX

The New RPP will provide benefits in respect of the recognized periods of service of current and former employees with the XXXXXXXXXX Group to the extent that benefits have accumulated on behalf of any individual under the Existing Plan up to the effective date of the New RPP. XXXXXXXXXX

XXXXXXXXXX

XXXXXXXXXX

XXXXXXXXXX

XXXXXXXXXX

Purpose of the Proposed Transactions

XXXXXXXXXX provide its employees with the same pension benefits that are currently provided under the Existing Plan. XXXXXXXXXX

Additional Information

To the best of your knowledge and the knowledge of XXXXXXXXXX none of the issues involved in this ruling request is being considered by a tax services office or taxation centre in connection with an income tax return already filed, and none of the issues is under objection or appeal.

Ruling Given

Provided that the statement of facts and proposed transactions are correct and constitute a complete disclosure of all the relevant facts and proposed transactions, and that the proposed transactions are carried out as described above, we rule as follows:

The contributions made to the New Plan by the XXXXXXXXXX, as described in paragraph 13 above, will be eligible contributions within the meaning assigned by subsection 147.2(2) of the Act and will be deductible pursuant to subsection 147.2(1) and paragraph 20(1)(q) of the Act.

The above ruling, which is based on the Act in its present form and does not take into account any proposed amendments thereto, is given subject to the general limitations and qualifications set out in Information Circular 70-6R2 dated September 28, 1990, and the Special Release thereto dated September 30, 1992, and is binding on Revenue Canada, Customs, Excise, and Taxation provided that the proposed transactions, as described above, are completed by XXXXXXXXXX.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate