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 annuitant can defer tax on amounts received out of or under a 147(2)(k)(vi) annuity.
Position: No.
Reasons: Taxed on receipt; no provision in Act for further deferral.
XXXXXXXXXX 993271
P. Spice
Attention: XXXXXXXXXX
December 16, 1999
Re: Subparagraph 147(2)(k)(vi) of the Income Tax Act (the "Act")
This is in reply to your facsimile transmission of December 10, 1999, concerning the above-noted topic which was forwarded to us for reply. You ask whether an individual who elected under subparagraph 147(2)(k)(vi) of the Act to have an amount out of a deferred profit sharing plan ("DPSP") used to purchase an annuity can now transfer an amount out of that annuity to another deferred income or tax-sheltered plan. You refer to our letter of September 11, 1984 (EC4247), in which we advised that an amount received out of such an annuity was taxable under paragraph 56(1)(d) of the Act as received, and that such annuity payments could not be transferred to either a DPSP or a registered retirement savings plan.
This will serve to confirm that payments out of or under a subparagraph 147(2)(k)(vi) annuity are taxed as received although, since 1996, the taxing provision is paragraph 56(1)(d.2) of the Act, and not paragraph 56(1)(d). There is no provision in the Act which provides for a tax-deferred transfer to another registered plan of such annuity payments or of the proceeds from the disposition of such an annuity.
We trust this letter is sufficient for your purposes.
Yours truly,
Patricia Spice
for Director
Financial Industries Division
Income Tax Rulings &
Interpretations Directorate
Policy and Legislation Branch
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