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:
Can funds in a DPSP be split on a mariage breakdown
POSITION TAKEN:
No
REASONS FOR POSITION TAKEN:
Paragraph 147(2)(e) specifically provides that rights under a DPSP can not be assigned.
FINANCE OPINION:
na
JURISPRUDENCE:
na
RCT PUBLICATIONS:
na
HAA NUMBER:
HAA 7209-1
Attention: XXXXXXXXXX
Dear Sirs:
RE: Splitting Deferred Profit Sharing Plan funds on Marriage Breakdown
This is in reply to your letter of October 27, 1993, with respect to the payment of benefits from, or division of funds held in, a deferred profit sharing plan ("DPSP") as a consequence of a marriage breakdown.
There are no provisions in the DPSP legislation which will allow funds to be paid to a spouse or former spouse of an employee participating in a DPSP as a consequence of a marriage breakdown. Furthermore, paragraph 147(2)(e) provides that a DPSP must stipulate that no right or interest under a plan of an employee can be surrendered or assigned. Accordingly, and in reply to your specific questions:
1. the splitting of DPSP funds as directed by a court order upon a marriage breakdown is not provided for in the DPSP legislation;
2. the text of a DPSP can not provide for the splitting of a participating employees funds;
3. funds can not be transferred to an RRSP of a former spouse of an employee; and
4. if funds are paid directly to a spouse or former spouse of a participating employee, the payment must be made at the request and direction of the employee and must be reported on a T4A as the employees income.
The above comments are based on our understanding of the law as it applies in general and may or may not apply to the circumstances of a particular case. They do not form an advance income tax ruling, however, and they are not binding on the Department.
Yours truly,
for DirectorFinancial Industries Division Rulings Directorate
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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