29 April 1999 External T.I. 9904305 - MINIMUM AMOUNT, AGE IN WHOLE YEARS

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: Does the age at the beginning of the year for purposes of the minimum amount in subsection 146.3(1) mean the age in whole years at the end of the previous year?

Position: Yes.

Reasons: All individuals born in the same year should use the same number for purposes of computing the minimum amount.

XXXXXXXXXX 						990430
M. P. Sarazin
Attention:  XXXXXXXXXX 

April 29, 1999

Dear Madam:

Re: Minimum Amount for a Registered Retirement Income Fund ("RRIF")

This is in reply to your letter dated February 17, 1999, wherein you ask for clarification with respect to the expression "the number that is or would be, the age in whole years of the annuitant at the beginning of the year" with regard to the determination of the minimum amount for purposes of a RRIF.

Where an annuitant's birth date is January 1, you are uncertain as to whether the age in whole years at the beginning of the year relates to the age on December 31 of the previous year or on January 1 of the current year.

Comments

The Department's general views in respect of RRIFs can be found in Information Circular 78-18R5, Registered Retirement Income Funds. The expression "minimum amount" has the meaning assigned by subsection 146.3(1) of the Income Tax Act and we note that the terminology referred to above relates to a previous definition of that term and is no longer used in the current definition of "minimum amount".

As stated in paragraph 5 of IC 78-18R5 the minimum amount is computed by multiplying the fair market value of the property held in connection with the fund at the beginning of the year by a prescribed factor corresponding to the age of the first annuitant under the fund or, if the first annuitant elects before any payments are made under the fund , by a factor corresponding to the age of the individual who is the annuitant's spouse at the time of the election.

The prescribed factor is described in section 7308 of the Income Tax Regulations (the "Regulations"). The prescribed factor for a qualifying RRIF, within the meaning assigned by subsection 7308(2) of the Regulations, is the factor in the table found in subsection 7308(3) of the Regulations and the prescribed factor for all other RRIFs is the factor in the table found in subsection 7308(4) of the Regulations. In either case, the factor is based on the age in whole years of the individual (or the individual's spouse where an election has been made) at the beginning of the year. In our view, the age at the beginning of the year is the individual's age on December 31 of the preceding year. Consequently, an individual with a birthday on January 1 would use the same factor as an individual with a birthday on December 31 of the same year.

You should also note that the minimum amount for the year in which an annuitant enters into the RRIF is nil.

We trust these comments will be of assistance.

Yours truly,

Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate