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:
1. Can an RRSP or RRIF that is not a spousal or common-law partner ("CLP") plan receive a transfer from a spousal or CLP plan after a marriage breakdown?
2. Must the issuer maintain the designation of the plan as a spousal or CLP plan after the annuitant has died?
Position:
1. Yes, but the transferee plan becomes a spousal or CLP plan.
2. No.
Reasons:
1. The definition of a "spousal or common-law partner plan" in subsection 146(1) of the Act is clear.
2. At death the annuitant may be deemed by subsection 146(8.8) to receive an amount, however, paragraph 146(8.7)(e) provides that the attribution rules are not applicable to such an amount.
XXXXXXXXXX 2001-009846
P. Kohnen
October 25, 2001
Dear XXXXXXXXXX:
Re: Request for technical interpretation - Spousal Plans
on Marriage Breakdown and Death of an Annuitant
This is in reply to your letter of August 23, 2001, wherein you requested our views with respect to the transfer of property from a spousal registered retirement savings plan ("RRSP") in the event of a marriage breakdown, and the necessity of designating an RRSP as a spousal plan following the death of the annuitant.
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 advanced income tax ruling request. Where the particular transactions are completed, the enquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following general comments, which may be of assistance.
A "spousal or common-law partner plan" is defined in subsection 146(1) of the Income Tax Act (the "Act") to mean
a) a registered retirement savings plan
(i) to which the taxpayer has, at a time when the taxpayer's spouse or common-law partner was the annuitant under the plan, paid a premium, or
(ii) that has received a payment out of or a transfer from a registered
retirement savings plan or a registered retirement income fund ("RRIF") that was a spousal or common-law partner plan in relation to the taxpayer, or
(b) a registered retirement income fund that has received a payment out of or a transfer from a spousal or common-law partner plan in relation to the taxpayer.
By definition, any RRSP or RRIF, which receives property from a spousal or common-law partner plan, will be a spousal or common-law partner plan. The attribution rules in subsection 146(8.3) of the Act for RRSPs, and 146.3(5.1) of the Act for RRIFs, could be applicable if the taxpayer and his or her spouse or common-law partner re-marry or reconcile prior to receipt of an amount from the RRSP or RRIF by the annuitant. Accordingly, the Act does not allow for the conversion of a spousal or common-law partner plan into a plan that is not a spousal or common-law partner plan.
With respect to the death of the annuitant of a spousal or common-law partner plan, the plan issuer need not maintain the designation of the plan as a spousal or common-law partner plan. Where the annuitant of an RRSP has died, subsection 146(8.8) of the Act may deem the annuitant to have received, immediately before death, an amount from the plan, however, paragraph 146(8.7)(e) of the Act provides that the attribution rule in subsection 146(8.3) will not apply to that amount.
We trust that the above comments are of assistance.
Yours truly,
Roberta Albert, C.A.
for Director
Financial Industries Division
Income Tax Rulings Directorate
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