12 February 1985 Income Tax Severed Letter E-853 - []

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.

XXXX

M.E. Bartley (613) 995-0051 February 12, 1985

Dear XXXX

We reply to your letter of January 2 concerning deferred annuities as "retirement income" for a registered retirement savings plan (RRSP) within paragraph 146 (1)(i.1) of the Income Tax Act. You requested an advance ruling and submitted the minimum fee of $250.00 but because there is no evidence of a contemplated transaction we can offer only our opinion upon the question which you raised; your fee will be refunded to you under separate cover.

Paragraph 146(l)(i.l) of the Act requires, in part, that if an annuity is to qualify as "retirement income", the payments must commence at maturity of the RRSP. There is nothing to prevent an RRSP acquiring the annuity contract prior to the date of maturity and deferring the commencement of the payments until the date of maturity of the plan. If the contract otherwise satisfies paragraph 146(1)(i.1) of the Act, such a contract constitutes a qualified investment of the plan trust within subparagraph 146(1)(g)(iii) between the date the plan acquires the annuity and the date the plan matures. Thereafter the annuity must produce equal annuity payments in accordance with paragraph 146(2)(b) of the Act.

The foregoing comments contemplate a trusteed RRSP which may acquire an annuity contract as a qualified investment. In our opinion such an arrangement is not possible in respect of plans issued by a depositary within clause 146(l)(j)(ii)(C) of the Act. All of the property of such a plan must be invested in "deposits" until the date of maturity of the plan and the annuity which is acquired at that time must commence immediately. As a consequence a depositary RRSP may not acquire a deferred (or any) annuity before maturity nor may it acquire a deferred annuity upon maturity except at the cost of deregistration of the plan.

Yours truly,

for Director Non-Corporate Rulings Division

MEB/j1 146(1)(i.l) 146(2)