30 August 1996 Internal T.I. 9628206 - RRIF, IRREVOCABLE BENEFICIARY

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 a RRIF have an irrevocable beneficiary?

Position:

Yes

Reasons:

Allowed under Insurance Act and meets provisions of the Act

							August 30, 1996

	HEADQUARTERS				HEADQUARTERS
	Betty-Ann Ward				M.P. Sarazin
	Client Services Directorate	(613) 957-3499
	Assessing
	Attention: Colleen Horton
							962820

Ministerial Correspondence Request for Insert

This is in reply to your memorandum dated August 23, 1996, wherein you requested an insert discussing a taxpayer's perception of an inconsistency in Canada's tax laws regarding RRSPs and RRIFs in order to enable you to complete your file 96-05362M.

We would recommend the following insert:

"A taxpayer is entitled to transfer the property in an unmatured RRSP to a RRIF on a tax-free basis. The Income Tax Act does restrict the carriers that may enter into a RRIF contract with the taxpayer. In all cases, the RRIF contract must satisfy all of the conditions required under the Income Tax Act. Generally, RRIF carriers include banks, trust companies and life insurance companies.

Under the Insurance Act, an annuitant can name his or her spouse as a beneficiary and also name his or her children as irrevocable beneficiaries under the life insured RRIF contract thereby allowing the annuitant to determine how the property remaining in the RRIF will be distributed after his or her death and the spouse's death. A RRIF which contains an irrevocable beneficiary designation will satisfy the conditions for registration under the Income Tax Act. Unfortunately, the laws governing the RRIF contracts issued by other carriers do not permit the designation of an irrevocable beneficiary. Consequently, the problem is not with the application of the Income Tax Act but with the differences between the Insurance Act and the laws pertaining to RRIF contracts issued by banks and trust companies."

We trust the above insert will be of assistance to you.

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