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: Why are RRSP amounts not eligible for 70(2) election?
Position: Act clearly does not include rrsp.
Reasons: Section 146 deals with taxation of RRSP amounts on death.
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Herb Dhaliwal, Minister of National Revenue, has asked me to reply to your facsimile of November 19, 1998, concerning Revenue Canada’s treatment of certain lump sum pension payments as being eligible for a “rights or things” election under subsection 70(2) of the Income Tax Act when all other types of lump sum pension or registered retirement savings plan payments are not eligible for the rights or things election.
The confidentiality provisions of the Act prevent me from discussing any particular taxpayer or group of taxpayers; however, I can provide you with general information.
The Act clearly provides for the taxation of taxpayers’ pension and registered retirement savings plan entitlements on their death. The treatment of pension and registered retirement savings plan entitlements is explained in Revenue Canada’s guide titled Preparing Returns for Deceased Persons, a copy of which is attached. In addition, paragraphs 15 and 16 of Interpretation Bulletin IT-212R3, Income of Deceased Persons - Rights or Things, state that lump-sum pension payments in respect of a deceased employee’s interest in the pension plan, other than in exceptional circumstances, and registered retirement savings plan entitlements at the time of death are not rights or things within the meaning of subsection 70(2) of the Act.
One of the exceptional circumstances when a lump-sum pension payment will qualify as a right or thing, as described in paragraph 15 of the above-mentioned Bulletin is where a pension plan provides for voluntary withdrawal of contributions by an individual contributor at times other than on retirement or on leaving the employment. Another exceptional circumstance exists when a pension plan administrator makes an error in computing a pension plan member’s benefits and a corrective payment is required to provide the member with the benefits that had been earned under the pension plan. When a pension plan member dies before the administrator corrects the error, the corrective payment relating to the period before the member’s death would constitute a right or thing for purposes of subsection 70(2) of the Act.
I trust my comments are of assistance to you.
Yours sincerely,
Bill McCloskey
Assistant Deputy Minister
Policy and Legislation Branch
M. Sarazin
952-9853
December 23, 1998
983312
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