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:
Comparative analysis of the taxation of the various means available for retirement savings.
Position:
Provided a general outline of the taxation of retirement savings arrangements
Reasons:
Non specific answers were requested.
XXXXXXXXXX 81562
W. C. Harding
Attention: XXXXXXXXXX
July 29, 1998
Dear Sirs:
Re: Development of Annuity and Pensions Market
We were asked by the Office of the Superintendent of Financial Institutions Canada to respond to item (vii) of your letter to them of April 13, 1998.
Canadian individuals may save for retirement through a variety of tax assisted programs that generally provide for the deduction of contributions and the deferral of taxation on the growth of savings until amounts are received on retirement. For purposes of taxation, these programs are integrated with each other so any comparative advantage between them in terms of taxation is limited.
The programs are regulated by the government of Canada but are primarily operated by the financial industry including banks, insurers and trust companies. Savings can be maintained in a number of forms including deposits, trusts and contracts of insurance. When savings are held in trusts or under insurance contracts, the funds may also be invested in a number of financial products including unit trusts, debt instruments, corporate shareholdings and annuities.
The comparative advantage of saving for retirement through tax assisted programs largely depends on the taxes otherwise payable by an individual on unassisted savings through similar products. In this respect, we have included two booklets for your consideration. The first booklet, the General Income Tax Guide, provides an overview of Canadian taxation of personal income. The second booklet, RRSPs and Other Registered Plans for Retirement, provides additional information on the regulations governing most of our tax assisted programs.
We trust this information will be of assistance to you.
Yours truly,
Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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