6 October 2010 External T.I. 2010-0357521E5 - Request to deduct RRIF losses from taxable income.

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.

Principal Issues: Taxpayer incurred losses inside his RRIF and is requesting a special ruling allowing him to deduct these losses from his taxable income.

Position: No.

Reasons: There is no provision in the Income Tax Act which allows a taxpayer to deduct losses incurred in a RRIF against taxable income.

XXXXXXXXXX
									2010-035752
									Jason R. Ward
									(613) 957-9769
October 6, 2010 

Dear XXXXXXXXXX :

Re: Losses incurred in a Registered Retirement Income Fund

This is in reply to your letter dated January 20 and forwarded to our office on February 16, 2010, regarding the deductibility of losses incurred in your Registered Retirement Income Fund ("RRIF"). Specifically, you have indicated that your RRIF disposed of certain mutual fund units in order to fund retirement benefits required to be paid to you out of or under the RRIF, and that the proceeds of disposition received by the RRIF in respect of those particular mutual fund units were less than the amount originally paid by your Registered Retirement Savings Plan ("RRSP") to acquire the particular mutual fund units. You have requested a ruling allowing you to deduct the losses incurred in your RRIF upon the disposition of the particular mutual fund units in computing your taxable income for the 2009 taxation year.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. We are, however, prepared to offer the following general comments, which may be of assistance.

Pursuant to section 146.3 of the Income Tax Act (the "Act"), a RRIF carrier must pay a minimum amount to the RRIF annuitant every year, computed by reference to the fair market value of the RRIF property at the beginning of the year and a prescribed factor. The RRIF annuitant may receive amounts from the RRIF that are in excess of the minimum amount in any year. In general, subsection 146.3(5) of the Act requires the annuitant of a RRIF to include all of the amounts received out of or under the RRIF in income. There is no provision in the Act which permits a RRIF annuitant to claim a deduction from their taxable income in respect of losses incurred in their RRIF.

We trust that our comments will be of assistance to you.

Yours truly,

Mary Pat Baldwin, CA
for Director
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch