18 December 2006 External T.I. 2006-0214161E5 - Spousal RRSP, Taxation of Withdrawals

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: Will the attribution rules in subsection 146(8.3) apply to withdrawals from a spousal RRSP?

Position: No

Reasons: Not if annuitant's spouse did not contribute to a spousal RRSP in the year of withdrawal or in the previous two years.

									2006-021416
XXXXXXXXXX 								Bruce Hartt
(613) 946-3558
December 18, 2006

Dear XXXXXXXXXX:

Re: Withdrawal from Spousal Registered Retirement Savings Plan

This is in reply to your enquiry sent to the Summerside Taxation Centre and forwarded to this Directorate requesting our views regarding the taxation of amounts withdrawn from a spousal registered retirement savings plan ("RRSP").

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, Advanced Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. The following comments are, therefore, of a general nature only and are not binding on the Canada Revenue Agency (CRA). All publications referred to herein can be accessed on the CRA website at the following address: http://www.cra-arc.gc.ca/tax/technical/incometax/menu-e.html.

Our Comments

In our phone conversation of December 1, 2006, (Hartt/XXXXXXXXXX) you confirmed that in February 2005 you contributed $16,500 to a spousal RRSP and that this is the only contribution you have made to a spousal RRSP.

There are special income attribution rules contained in the Income Tax Act (the "Act") that apply when funds are withdrawn from a spousal RRSP within two years following the year of contribution to the spousal RRSP. Generally, the special attribution rules in subsection 146(8.3) of the Act will apply where an annuitant withdraws an amount from a spousal RRSP and the annuitant's spouse has contributed to a spousal RRSP for that annuitant in the year of withdrawal or in the two previous years. Consequently, in your particular case, provided no other contributions are or were made to a spousal RRSP, the contribution by you to a spousal RRSP in February 2005 cannot be withdrawn before January 1, 2008 without you having to include the amount in your income.

We trust our comments are of assistance.

Yours truly,

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