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 new retirement savings plan of 70 or 71 year old annuitant can be registered in 1997 in order to receive property from RRSP which was registered before 1997.
Position:
No.
Reasons:
Plans to be registered in 1997 and later years must provide for maturity by end of year in which annuitant turns 69.
XXXXXXXXXX 971843
Attention: XXXXXXXXXX
July 25, 1997
Dear Sirs:
Re: Amendment to Paragraph 146(2)(b.4) of the Income Tax Act (the "Act")
This is in reply to your facsimile transmission of July 7, 1997, in which you ask whether the amendment to paragraph 146(2)(b.4) of the Act will prevent a transfer under paragraph 146(16)(a) of the Act from a registered retirement savings plan ("RRSP") which was registered before 1997 (the "transferor RRSP") to an RRSP of the same annuitant (the "transferee RRSP") which is to be registered in 1997. You wish us to comment on this issue with respect to an annuitant who is 69 years of age in 1996 and to an annuitant who is 70 years old in 1996. Our comments follow.
TRANSFEROR RRSP
New paragraph 146(2)(b.4) of the Act requires that in order to be registered a retirement savings plan must provide that the plan mature by the end of the year in which the annuitant attains 69 years of age. This requirement is varied, however, with respect to annuitants who are 69 or 70 years of age in 1996.
If the annuitant is 70 years of age in 1996 the transferor RRSP need not be amended to comply with the new maturity date.
If the annuitant is 69 years of age in 1996, new paragraph 146(2)(b.4) applies to require maturity of the plan by the end of the year in which the annuitant attains 70 years of age. Therefore, the transferor RRSP must mature by the end of 1997. If the amendment is not made, subsection 146(13.2) of the Act will deem the transferor RRSP to have been amended immediately after 1997 and will deem it not to comply with the requirements of section 146 of the Act for its acceptance for registration under the Act. Notification of the effect of subsection 146(13.2) of the Act must be sent to the annuitant in accordance with subsection 146(13.3) of the Act before July 1997 unless the plan has already matured or arrangements have been made for the plan to mature or the property to be transferred or otherwise paid out of the plan before the end of 1997.
Where the RRSP is deemed to have been amended and not to comply with the requirements of the Act for registration pursuant to subsection 146(13.3), subsection 146(12) of the Act requires the annuitant to include in income for the year an amount equal to the fair market value of the property in the RRSP. The fair market value is to be ascertained at a time immediately before the plan is deemed to be amended.
TRANSFEREE RRSP
The transferee RRSP which is to be registered in 1997 is required to comply with the new law that the plan mature by the end of the year in which the annuitant attains the age of 69. Where the annuitant is 70 or 71 years of age in 1997 a retirement savings plan will fail to qualify for registration. Thus, no property can be transferred on a tax-deferred basis to such a plan in 1997 from the transferor RRSP.
We have not commented on the transfer provision contained in paragraph 146(16)(a) of the Act since it does not affect our conclusion in this matter.
Although the foregoing comments are not binding on the Department, we trust they 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
Email this Content