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: Can the Canada Customs and Revenue Agency waive the requirement to withhold income tax where funds held by an RRSP are ordered by the court to be forfeited to the Attorney General for Ontario as proceeds of crime?
Position: No.
Reasons: The Agency can only administer the law as it currently reads. The Department of Finance has the responsibility for drafting proposed changes to the law.
XXXXXXXXXX 2000-005100
G. Kauppinen
Attention: XXXXXXXXXX
November 14, 2000
Dear Sirs:
Re: Withholding Tax on Court-Ordered Collapse of
Registered Retirement Savings Plan ("RRSP")
This is in reply to your letter transmission dated October 12, 2000 regarding the above-noted subject.
You ask whether our "practice" of requiring financial institutions to withhold income tax on a distribution of funds from an RRSP, when the distribution is pursuant to a court order which requires the assets held by the RRSP to be forfeited to the Attorney General for Ontario, could be modified since:
1. the withholding permits the offender to use the amount withheld by the financial institution as a credit against other income taxes owing thus benefiting from illegally obtained funds; and
2. the withholding could result in victims of crime being deprived of money to which they are otherwise entitled because of the withholding requirement.
We cannot waive a requirement to withhold which is clearly provided for in the Income Tax Act ("Act"). If you consider the withholding to be inappropriate in the circumstances that you have described, representations should be made to the Department of Finance, which has the responsibility for drafting proposed changes to the law. The Canada Customs and Revenue Agency can only administer the provisions of the Act as they currently read.
We trust our comments will be of assistance.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings Directorate
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