1 March 1994 External T.I. 9402215 - HAA7255-1 RRSP ADVANTAGES CHARITABLE DONATIONS

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.

RULINGS DIRECTORATE
CORRESPONDENCE SUMMARY

DOCUMENT TYPE:

Opinion File #E9402215

Principal Issues:

Is a charitable donation given by a Financial Institution when you purchase an RRSP a prohibited advantage

Position TAKEN:

We believe it is prohibited if the annuitant can direct the payment to a charity of his choice.

Reasons FOR POSITION TAKEN:

It appears to be offensive given the reason for the provision was to prohibit marketing rewards to annuitants for purchasing certain RRSPs.

LEGAL:

FINANCE OPINION:

JURISPRUDENCE:

RCT PUBLICATIONS:

HAA NUMBER: 7255-1

XXXXXXXXXX 5-940221

Attention: XXXXXXXXXX

March 1, 1994

Dear Sirs:

Re: Paragraph 146(2)(c.4) of the Income Tax Act (the "Act")

This is in reply to your letter of January 28, 1994, regarding your contribution of funds to charitable organizations based on contributions made to RRSPs.

Since the subject of your enquiry appears to relate to a factual proposal, we are unable to provide you with any specific comments at this time. Confirmations of the tax implications in particular situations may only be provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in the Department's Information Circular 70-6R2.

While we are unable to address your specific situation, it appears to us that a contribution made to a charity based on contributions to an RRSP by an annuitant of the RRSP would be an unacceptable advantage under the provisions of paragraph 146(2)(c.4) if:

the annuitant or a person not at arms length to the annuitant (herein after collectively referred to as the annuitant) was not at arms length with the organization;

the annuitant obtained the advantage of directing the payment of the donation to a particular charity or charities or of permitting someone else to direct the payment;

the annuitant received credit for the contribution; or

the annuitant obtained the right to claim a tax deduction in respect of the donation;

For the purposes of these conditions, we would also think that an annuitant would be conferred the advantage of being able to direct the contribution, if an RRSP was offered that provided a contribution would only be made to one or more specified organizations.

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. However, they do not form an advance income tax ruling and they are not binding on the Department.

Yours truly,

for Director
Financial Industries Division
Rulings Directorate