4 March 1998 Ministerial Letter 9802288 - LOSSES, RRIF WITHDRAWALS

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Issues: Could we ignore the withdrawal from a RRIF by a broker because the taxpayer did not intend that the amount be withdrawn?

Position: No

Reasons: The Act clearly provides for the taxation of RRIF withdrawals.

Signed on March 4, 1998

XXXXXXXXXX

Dear XXXXXXXXXX:

Thanks you for your letter of December 23, 1997, addressed to Mr. K.M. Burpee, former Assistant Deputy Minister of the Assessment and Collections Branch of Revenue Canada, concerning your request that a specific transaction undertaken outside of your registered retirement income fund ("RRIF") be deemed, for income tax purposes, to have taken place within the RRIF.

You state that there is no doubt that you wanted your RRIF to take the risk in respect of the acquisition of a specific option and you did not want the particular option acquired outside of the RRIF. However, because the option was not a qualified investment that could be held within a RRIF, XXXXXXXXXX used your personal trading account to acquire the option. When the funds were withdrawn from your RRIF and deposited in your personal trading account to cover the loss experienced in respect of the option, you were required to include the RRIF withdrawal as income. You have asked that the loss experienced in respect of the option be considered a loss experienced by the RRIF so that the withdrawal could be excluded from your income.

The Income Tax Act clearly provides that all amounts received out of or under a RRIF in a year have to be included in the recipient's income for that year. Since the amount was withdrawn from your RRIF and deposited in your personal trading account, the funds were received by you and must be included in your income. There is no provision in the Income Tax Act that, because of your intentions or instructions, would allow Revenue Canada to exclude the withdrawal from your income or to disregard the actual transactions that were undertaken on your behalf.

I regret that my response cannot be more favourable, but I trust my comments have explained the Department's position on this matter.

		Yours sincerely,

		Denis Lefebvre
		Assistant Deputy Minister
		Policy and Legislation Branch  

M.P. Sarrazin
980228
957-3499
February 5, 1998