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
Principal Issues:
Whether particular scheme to purchase life insurance to provide retirement income is an RCA.
Position TAKEN:
Maybe: If funded solely by employee, not an RCA; if funded in part or in whole by employer, then an RCA.
Reasons FOR POSITION TAKEN:
Wording of 207.6(2).
LEGAL:
FINANCE OPINION:
JURISPRUDENCE:
RCT PUBLICATIONS:
HAA NUMBER:
7200-9
XXXXXXXXXX 940517
Attention: XXXXXXXXXX
March 4, 1994
Dear Sirs:
This is in reply to your letter of February 22, 1994, in which you enclose a description of a life insurance policy being marketed to provide retirement income and ask whether it would be considered a "retirement compensation arrangement" pursuant to subsection 207.6(2) of the Income Tax Act (the "Act").
Written confirmation of the tax implications inherent in particular transactions are given by this directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R2. Where the particular transactions are completed, the enquiry should be addressed to the relevant District Taxation Office. The following comments are, therefore, of a general nature only.
Where a life insurance policy is owned directly by the employee and premiums are paid by the employee, subsection 207.6(2) of the Act does not apply. In order to meet the definition of a "retirement compensation arrangement" under either subsection 248(1) of the Act or the deeming provisions in section 207.6 of the Act, the arrangement must be funded in whole or in part by the employer.
If the employer "acquires an interest" in a life insurance policy in order to fund retirement benefits the employer is obliged to provide to the employee, then subsection 207.6(2) of the Act will deem the arrangement to be a retirement compensation arrangement.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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© Her Majesty the Queen in Right of Canada, 1994
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