26 August 1996 External T.I. 9627675 - STOLEN RRSP PROPERTY

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:

Whether annuitant must include benefit in income where cheque representing RRSP proceeds is stolen and cashed.

Position:

If benefit is received, it is included in income and no deduction if later stolen; if benefit never received, no income inclusion.

Reasons:

Wording of 146(8); if cheque stolen before "receipt" by annuitant, then no income inclusion but this is a question of property and banking law.

									962767
XXXXXXXXXX							P. Spice

August 26, 1996

Dear XXXXXXXXXX:

Re: Loss of Registered Retirement Savings Plan (RRSP) Withdrawal

This is in reply to your letter of August 15, 1996, in which you ask whether a deduction is available with respect to a stolen RRSP withdrawal.

Your letter refers to an actual fact situation and comments concerning the tax consequences occurring as a result of past transactions must be provided by your Tax Services Office. Although we cannot provide you with an interpretation that will bind the Department, we can provide the following general comments.

Subsection 146(8) and paragraph 56(1)(h) of the Income Tax Act (the "Act") require an individual to bring into income the amount of all benefits received in a year out of or under an RRSP. Benefits would include money and other property transferred out of the RRSP.

Where an individual receives the RRSP benefit directly or authorizes someone else, such as an agent, to receive it for him or her, the Act requires that the amount be taxed. If at the time of receipt or later, the money or property is stolen, there is no provision in the Act allowing a deduction from income for the amount of the value of the lost RRSP property. This is so even where it is the agent who steals the property.

If an individual or the individual's agent does not receive the RRSP benefit, the Act does not require an income inclusion. In other words, if money or other property was not legally transferred to or for the benefit of the individual or agent, there will be no tax consequences to the individual.

As the issue of whether a property has been received involves interpretations of property and, perhaps, commercial or banking law rather than tax law, you may wish to consult a lawyer.

We trust these general comments are of assistance. If you have further information or documents you wish to provide to the Department which may assist our officials in clarifying the tax consequences, please forward them to the Tax Services Office serving the area in which the individual in question resides.

Yours truly,

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