7 March 2000 External T.I. 2000-0007195 - RRSP - BENEFICIARY DESIGNATION

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.

Principal Issues: a) Can a non-resident annuitant designate a beneficiary of an RRSP?

b) How does an RRSP annuitant declare annual accrued income on a market-linked GIC held in an RRSP, when the yield is not known until the maturity?

Position: a) Yes

b) No requirement to report until amounts are paid to annuitant.

Reasons: a) Nothing in the Act to prevent this but refer to provincial legislation.

b) Non-resident annuitant is taxable under 212(1)(l) when amounts paid out of the RRSP to annuitant or to annuitant's credit.

XXXXXXXXXX 2000-000719
S. E. Thomson

Attention: XXXXXXXXXX

March 7, 2000

Dear XXXXXXXXXX:

Re: RRSPs and Non-Residents

This is in reply to your fax of February 14, 2000 to which you attached a copy of a request dated December 6, 1999. You have asked us to confirm that a non-resident annuitant of a registered retirement savings plan (an "RRSP") may designate a beneficiary of the RRSP. You also ask how the income from a market-linked guaranteed investment certificate ("GIC") may be declared annually by a non-resident annuitant, where the annual yield is not know until maturity of the GIC.

We are unable to definitively reply to such queries except in the context of an advance income tax ruling request as set out in Information Circular 70-6R3 Advance Income Tax Rulings. We nevertheless offer the following general comments which may assist you. Please note that these comments are not binding on the Canada Customs and Revenue Agency.

The Income Tax Act (the "Act") does not require than an annuitant of an RRSP be resident in Canada, nor is there any restriction under the Act regarding the designation of a beneficiary of an RRSP by a non-resident. However, there may be restrictions to the designation of a beneficiary under provincial legislation, and you may wish to confirm this with your legal department.

Where an RRSP trust owns a market-linked GIC, it is the RRSP trust (not the annuitant) that includes the income of the GIC in its income. Note that an RRSP trust is generally not taxable on its income by virtue of subsection 146(4) of the Act. Any amounts paid by the RRSP trust to the annuitant are taxable to the annuitant pursuant to subsection 146(8) of the Act. Where the annuitant is a non-resident, the RRSP trust is required by paragraph 212(1)(l) of the Act to withhold 25% of amounts paid to the non-resident (or a lesser amount where agreed to by treaty). For general information on the reporting requirements of an RRSP issuer with respect to a non-resident, please refer to Chapter 5 of the T4RSP and T4RIF Guide which is available from the tax services office or at the following web site: http://www.ccra-adrc.gc.ca/E/pub/tg/t4079eq/t4079-e.pdf

We trust that we have been of assistance.

Yours truly,

P. Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate