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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues:
Can a mortgage which has gone down in value or is worthless be removed from an RRSP.
Position: Yes.
Reasons:
As long as the transfer is at fair market value, the mortgage can be sold by the RRSP to anyone (including the annuitant of the RRSP).
XXXXXXXXXX 2003-000651
G. Kauppinen
April 3, 2003
Dear XXXXXXXXXX:
Re: RRSP - Worthless investments
This is in reply to your letter dated March 4, 2003 regarding investments held in your RRSP which have little or no value.
Opinions concerning proposed transactions involving specific taxpayers will only be provided in response to a request for an advance income tax ruling. For more information concerning advance income tax rulings, please refer to Information Circular 70-6R5 dated May 17, 2002, issued by the Canada Customs and Revenue Agency ("CCRA"). Consequently, we can only provide you with the following general comments.
An investment that you wish to take out of your RRSP (including a mortgage) because it has little or no value, can be sold from the RRSP to anyone (including yourself) for fair market consideration. However, subsection 146(9) of the Income Tax Act states that if an asset is transferred (sold) from an RRSP for consideration that is less than the fair market value of the property at the time of the transfer, or for no consideration, the difference between the fair market value of the property and the consideration, if any, shall be included in computing the income of the annuitant of the RRSP.
Therefore, if a property is transferred from your RRSP into your name personally for no consideration, there will be no income tax consequence as long as the fair market value of the property was nil at the time of the transfer. The value of the property at any time is a question of fact.
We trust our comments will be of assistance to you.
Yours truly,
Mickey Sarazin, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
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