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Principal Issues: Whether T5s should be filed where funds are withdrawn from an EFA to purchase funeral insurance? Who is responsible for issuing T5s w.r.t. 148.1(3) amounts?
Position: No answer. The custodian is responsible for issuing T5s.
Reasons: Not enough information. The custodian is generally the one who must return funds to the purchaser if the contract is cancelled.
XXXXXXXXXX 973184
M. Lemire
Attention: XXXXXXXXXX
May 6, 1998
Dear Sir/Madam:
Re: Eligible funeral arrangements
We are writing in reply to your letters of December 2, 1997 and January 2, 1998 in which you request technical interpretations on many issues that have arisen in relation to eligible funeral arrangements (EFAs).
Funds withdrawn from an EFA to purchase funeral insurance
You first asked whether you would be required to produce T5s where funds are withdrawn from an EFA for the purpose of purchasing funeral insurance.
We cannot ascertain from your letter whether the funeral insurance contract would be an EFA. Additionally, we cannot ascertain whether there would be a receipt of funds by the individual or a transfer of funds between custodians. The answers to these questions would determine whether you are required to issue T5 slips. We can, however, offer the following general comments with respect to withdrawals from an EFA.
Where an EFA in respect of an individual is cancelled and the balance of the funds under the arrangement is distributed at any time in a taxation year to the individual, an amount is generally required by subsection 148.1(3) of the Income Tax Act to be added in computing the individual’s income for the year from property. In such case, T5s are required to be produced pursuant to paragraph 201(1)(f) of the Income Tax Regulations. For subsection 148.1(3) not to apply, funds from an EFA of an individual must generally be transferred directly by the custodian of the EFA to the custodian of another EFA of the same individual.
Income Tax Reporting
You also want us to confirm that the custodian under an EFA is the person responsible for issuing T5 slips with respect to amounts that are required by subsection 148.1(3) of the Act to be included in computing a person’s income.
Every person who makes a payment after 1995 to a resident of Canada as or on account of an amount that is required by subsection 148.1(3) of the Act to be added in computing a person’s income for a taxation year is required to produce a T5 Summary and T5 Supplementary information returns (T5 slips) by virtue of paragraph 201(1)(f) of the Income Tax Regulations.
It is our opinion that the “custodian” of an EFA is generally the person responsible for issuing T5 slips under paragraph 201(1)(f) of the Regulations. As defined in subsection 148.1(1) of the Act, the custodian of an EFA means, where a trust is governed by the EFA, a trustee of the trust and, in any other case, a “qualifying person” who receives a contribution under the EFA as a deposit for the provision by the person of funeral or cemetery services. A qualifying person, as defined in that subsection, means a person licensed or otherwise authorized under the laws of a province to provide funeral services for individuals (i.e. funeral homes or cemetery owners).
This opinion is provided in accordance with the comments in paragraph 22 Information Circular 70-6R3. It is not an advance income tax ruling and, accordingly, it is not binding on Revenue Canada.
We trust our comments will be of assistance to you.
Yours truly,
Director
Resources, Partnerships and
Trusts Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
- 1 -
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1998
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1998
Email this Content