30 November 1996 Ruling 9701513 - PENSION WIND-UP, MISSING MEMBERS

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:

Would a payment to the courts in respect of missing members on the wind-up of a pension plan be subject to withholding taxes?

Position:

Yes

Reasons:

153(1) clearly applies to a payment on termination of a pension plan. Amount withheld should be in accordance with 103(4) of the Regulations.

XXXXXXXXXX							970151
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1997

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 above-noted taxpayer. In your letter dated XXXXXXXXXX, you provided us with additional information regarding the proposed transactions described in your original letter. We also acknowledge the information provided during our various telephone conversations (XXXXXXXXXX).

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

A pension plan (the "Plan") was created by a Trust Deed dated XXXXXXXXXX, as amended from time to time, and made between

XXXXXXXXXX

The Plan is registered with Revenue Canada (Registration #XXXXXXXXXX) and under the XXXXXXXXXX.

In XXXXXXXXXX, the Board of Trustees (hereinafter referred to as the "Board") of the Plan passed a resolution to wind-up and terminate the Plan pursuant to the XXXXXXXXXX and the Income Tax Act (the "Act"). The Board received regulatory approval to wind-up the Plan effective XXXXXXXXXX.

The Board intends to use Plan funds to purchase annuities for its members. Even though extensive efforts have been made to contact all of the members of the Plan, the Board has been unable to locate certain beneficiaries (the "Missing Members").

Proposed Transactions

XXXXXXXXXX, the Board will apply for advice and direction from the Court of Queen's Bench (the "Court") as to whether appropriate efforts have been made to locate the Missing Members under the Plan.

Immediately thereafter, the Board will apply to the Court to allow for the payment to the Court of the remaining trust monies belonging to the Missing Members and to allow for the wind-up of the Plan.

Purpose of the Proposed Transactions

The purpose of the proposed transactions is to discharge the Board of its responsibilities relating to the Plan and to preserve the modest amount of funds remaining in the Plan that relate to the Missing Members.

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 a taxation centre in connection with an income tax return already filed, and none of the issues is under objection or appeal.

Rulings 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 completed in the manner described herein, we rule as follows:

The amount paid to the Court on behalf of each Missing Member will be subject to withholding taxes under subsection 153(1) of the Act.

The amount to be withheld with respect to each of the Missing Members will be determined in accordance with subsection 103(4) of the Income Tax Regulations.

The above rulings, which are based on the Act in its present form and does not take into account any proposed amendments thereto, are given subject to the general limitations and qualifications set out in Information Circular 70-6R3 dated December 30, 1996, and are binding on Revenue Canada provided that the proposed transactions are completed within six months of the date of this letter.

Yours truly,

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