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 transfer of property by parent to an RESP for parent's child is a dispositon of property by the parent.
Position: Yes.
Reasons: The parent has not retained all incidents of beneficial ownership.
980466
XXXXXXXXXX T. Murphy
(613) 957-8283
Attention: XXXXXXXXXX
July 6, 1998
Dear Sirs:
Re: Paragraph (e) of the Definition of Disposition in Section 54 of the Income Tax Act
We are writing in reply to your letter of February 24, 1998, concerning whether a transfer of mutual fund units to a registered education savings plan ("RESP") would be a disposition under the above noted provision of the Act.
In your opinion, as the owner would be the subscriber and entitled to a "refund of payments" by virtue of subsection 146.1 (1) of the Act, there would be a change in the legal ownership of the units but no change in the beneficial ownership of the units.
As discussed in our telephone conversation of June 12, 1998 (XXXXXXXXXX/Murphy), the fact that a subscriber may be entitled to a refund of payments does not lead to the conclusion that there has been no change in the beneficial ownership of the units. In particular, as your scenario contemplates a parent transferring the units to an RESP for the parent's child, there would be a disposition of the units by the parent as it cannot be said that the parent has retained all incidents of beneficial ownership; most notably, the parent has forgone the right to income.
We trust our comments are of assistance to you.
Yours truly,
R.S. Biscaro
Director
Resources, Partnerships and
Trusts Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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