31 October 1989 Administrative Letter 58576 F - Transfer of Unused Credit to Spouse

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.

October 31, 1989

Dear Sir:

Re:  Transfer of Unused Credits to Spouse

We are responding to your letter of August 29, 1989, concerning the transfer of the unused portion of your pension tax credit to your spouse.

As you did not provide us with sufficient detail concerning your return, we are unable to provide a response specific to your situation.  However, we would like to provide the following general comments concerning such transfers which may be of assistance to you.

As we understand your situation, you have an eligible pension tax credit as determined in paragraphs 2 to 5 of the attached Interpretation Bulletin IT-517 "Pension Tax Credit".  Your taxable income is nil, and thus your pension tax credit is not required to reduce ordinary tax payable to nil.  However, you do have alternative minimum tax payable.  Since minimum tax cannot be reduced by means of the pension tax credit, you are unable to use your credit.  You have asked whether this credit, which has not been used to reduce tax payable for either ordinary or minimum tax purposes, can be transferred in full to your spouse.

As stated in paragraph 8 of IT-517, the pension tax credit as well as other eligible tax credits are available for transfer to an individual's spouse. However, the amount to be transferred to the spouse is reduced by the amount of federal tax payable by the individual (whether calculated in the ordinary manner or as a minimum tax) computed without reference to any tax credit other than the Unemployment Insurance Premium Tax Credit, the Canada Pension Plan Tax Credit and the Personal Tax Credit available to a single individual under paragraph 118(1)(c) of the Income Tax Act.  This is so despite the fact that minimum tax cannot be reduced by the pension tax credit otherwise available.

Accordingly in the example you have given, only that portion of the transferrable credits which exceeds the minimum tax payable (computed without reference to any tax credit other than the Unemployment Tax Credit, Canada Pension Plan Tax Credit and the Basic Personal Tax Credit) can be transferred to your spouse.

If you have a specific concern with the calculation of the tax credits for your return or for that of your spouse, you may wish to contact the Ottawa District Taxation Office located at 360 Lisgar Street, Ottawa, K1A 0L9.  Please note that authorization from your spouse is required should you be acting on her behalf.

Yours truly,

P.D. Fuocofor DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch

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