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 property be transferred from an RRSP to a RRIF or from a RRIF to a RRIF at its cost amount?
Position:
Our current position is that these transfers must be made at the property's fair market value. We are reviewing this position and may change it in certain situations if warranted.
Reasons:
The current position is well established. However we are reviewing it to determine if a different position might be warranted in certain circumstances. This review may take some time to complete and we will maintain our current position until the review is completed.
971736
XXXXXXXXXX W.C. Harding
Attention: XXXXXXXXXX
December 17, 1997
Dear Sirs:
Re: Transfer of Assets from an RRSP to a RRIF
This is in reply to your letter of June 20, 1997, wherein you requested our comments on the Department's position that transfers of property from an RRSP to a RRIF of the same annuitant must be recorded at the property's fair market value.
As discussed during our telephone conversation of July 26, 1997, we have undertaken a review of our current position with respect to this matter to determine if it remains appropriate in all circumstances. However, this review has taken longer then originally expected and may not be completed for some time. Accordingly we are taking this opportunity to provide you with comments on our current position with respect to this matter as discussed below.
The question you raised generally arises in relation to the calculation of the tax payable on excess foreign property held in an RRSP or RRIF. In this respect, subsection 206(4) of the Income Tax Act (the "Act") provides that where an RRSP, RRIF or other taxpayer, as noted therein, acquires a property from a person with whom the taxpayer was not dealing at arm's length, for no consideration or for consideration that is less than the fair market value of the property at the time, the taxpayer will be deemed to have acquired the property at its fair market value. The provision also affirms that a trust shall be deemed not to deal with another trust at arm's length if any person is beneficially interested in both trusts. Accordingly any acquisition by a RRIF of property transferred from an RRSP where the annuitant under both plans is the same, must be recorded at the property's fair market value.
In contrast, as described in paragraph 12 of Interpretation Bulletin IT-412R2, where an annuitant of a self-administered RRSP has all of the property held in an RRSP transferred from one trustee to another pursuant to the provisions of subsection 146(16) of the Act, the Department takes the view that the transfer does not constitute an acquisition or disposition of property for the purposes of subsections 206(1) and (2) of the Act. Accordingly all of the property is transferred at its cost amount to the originating RRSP.
The Department is not prepared to consider this latter position as being applicable to transfers of property from a trust governed by an RRSP to a trust governed by a RRIF at this time because RRSPs and RRIFs generally have significant differences in their terms. However, as noted above we will continue to review this position to determine if any variations may be appropriate in any particular circumstances.
We trust these comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1997
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1997