23 October 1996 External T.I. 9633405 - SPOUSAL RRSP/RRIF ATTRIBUTION

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:Attribution rules for spousal RRSPs and RRIFs

Position: General explanation of law

Reasons: Routine provisions

XXXXXXXXXX							5-963340

October 23, 1996

Dear XXXXXXXXXX:

Re: Spousal RRSP/RRIF Withdrawals

This is in reply to your facsimile received in our offices on October 8, 1996, concerning the inclusion of amounts in the income of a contributor to a spousal RRSP as a result of the withdrawal of amounts out of a spousal RRSP or RRIF.

The Department has two publications, available from your local Tax Services Office that provide detailed explanations of the provisions you are referring to. The first publication is a booklet entitled "1995 RRSP and Other Registered Plans for Retirement" and the provisions are explained on pages 18 and 19. The second publication is the Department's Interpretation Bulletin IT-307R3 entitled "Spousal Registered retirement Savings Plans" and the relevant explanations are contained in paragraphs 14 through 21. In addition, form T2205, entitled "Calculating Amounts From a Spousal RRSP or RRIF to Include in Income for 19__" should be of assistance.

Subject to a number of exclusions discussed in the above noted publications, if an amount is withdrawn from any spousal RRSP by an annuitant of the RRSP, and the spouse of the annuitant has contributed to any spousal RRSP in the year or in either of the two preceding years, the amount of the withdrawal or the amount of the contributions made in that period, whichever is less, must generally be included in the income of the contributor for the year. Similarly, if an amount in excess of the minimum amount for a year is withdrawn from an RRIF to which any spousal RRSP or spousal RRIF has been transferred, the lesser of the excess and any contributions made within the three year period must generally be included in the contributor's income for that year.

In respect to your first question and the two situations described in your letter, these provisions could apply. In particular, it will not matter if any of the withdrawals came specifically from contributions made prior to the start of the three calendar year period. If any contributions are made to any RRSP within the three year period and an excess withdrawal is made from a spousal RRIF, all or a portion of the excess amount withdrawn must generally be included in the income of the contributor.

Your second question was: Can a contributor continue to contribute eligible amounts to a spousal RRSP even though the spouse is receiving income from a spousal RRIF?

First, the provisions do not prevent any amount from being withdrawn from an RRSP or a RRIF. The provisions instead direct who must report the amounts received.

Second, in the case of a RRIF, the amount that must be included in the contributor's income is the lesser of:

the total of all contributions made within the three year period;

the amount received at a particular time; and

the amount by which the total received out of the RRIF at that time exceeds the minimum amount required for the year.

Because of this wording, there will be no attribution of income to the contributor to a spousal RRSP if the total amount received out of the particular spousal RRIF at the time of the contribution does not exceed the minimum amount required for the year in respect of that RRIF. This will be the case even if contributions are made to a spousal RRSP in the same year as the withdrawal.

We trust you will find these comments to be of assistance.

Yours truly,

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