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.
A.B. Adler (613) 957-8962
19(1)
April 4, 1990
Dear Sirs:
This is in reply to your letter dated March 13, 1990, and is further to ours of March 6, 1990, concerning an employee's maximum deductible contributions to an RRSP under subsection 146(5) of the Income Tax Act (the "Act").
You advised us that in item 2 of the hypothetical circumstances outlined in your letter of February 6, 1990 the employees' contributions referred to therein were intended to be made to their RRSPs rather than to the registered pension plan ("RPP") in question. Further, you asked whether this change in the facts would change our views with respect to the application of subsection 146(5) of the Act.
In our view the main criteria to be considered in determining whether existing paragraph 146(5)(a) of the Act applies to a specific situation in a year is whether the employer has or may at some future time contribute to a pension plan on behalf of the employee in respect of the year.
Under scenarios 2. (a) and (b) if, in fact, and RPP denies recognition of an employee's 1989 pre-membership service (that is a part of the period of such service that ends in 1990) for the purposes of the RPP, and only periods of service after 1989 while a member thereunder will qualify for benefits thereunder, it is our view that the 1989 contribution limit under paragraph 146(5)(b) would apply to the employee. (We assume the employee is not entitled to receive pension benefits from another pension plan in respect of an earlier employment in 1989.) Further, it continues to be our view that in 1990 the contribution limit under paragraph 146(5)(a) will apply to the employee where the accrual of benefits commences in 1990 upon the employee becoming a member of the RPP.
We trust that our comments are sufficient for your purposes.
Yours truly,
W. Douglas for Director Financial Industries Division Rulings Directorate
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