7 March 1997 External T.I. 9703875 - INTEGRATE ANNUITY WITH CPP

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:

Can annuity payments be integrated with CPP?

Position:

No

Reasons:

Provision only refers to OAS.

	                      	970387
XXXXXXXXXX	                             M.P. Sarazin

Attention: XXXXXXXXXX

March 7, 1997

Dear Sirs:

Re: Intergration of Registered Annuity with OAS/CPP

This is in reply to your facsimile dated February 12, 1997, wherein you requested our comments as to whether a registered annuity can be integrated with Old Age Security and Canada Pension Plan benefits.

Comments

Under the provisions of paragraph 146(2)(b.1) of the Income Tax Act, a retirement savings plan cannot provide for the payment to the annuitant of a retirement income except by equal annual or more frequent periodic payments until there is a payment in full or partial commutation of the retirement income. However, subparagraph 146(3)(b)(ii) of the Act provides that the Minister may accept for registration any retirement savings plan notwithstanding that the plan allows for the reduction of the annual or more frequent periodic amount payable by way of an annuity where the reduction results from the person receiving a pension under the Old Age Security Act provided that the reduction does not exceed the amount received in that period under that Act. Since there is no similar provision in respect of amounts received as Canada Pension Plan payments, the provisions of paragraph 146(2)(b.1) of the Act will not be satisfied if the annual or more frequent periodic amount payable by way of an annuity is reduced by the amount of Canada Pension Plan payments received by the annuitant.

We also note that the provisions of subparagraph 146(3)(b)(ii) of the Act refer specifically to a reduction in respect of the benefits received under the Old Age Security Act by the particular person in the particular period. Consequently, the annuity payments would not be allowed to be integrated with the benefits received under the Old Age Security Act by the particular person's spouse in the particular period.

We trust the above comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch