4 December 1989 Internal T.I. 59089 F - Retirement Compensation Arrangements

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.

Dear Sirs:

This is in reply to your letter of November 15, 1989 wherein you requested clarification as to whether or not the retirement compensation arrangement ("RCA") provisions of the Income Tax Act (the "Act") 24(1)

The RCA provisions generally apply when any "contributions" (payments) are made to another person, including a bank, trust company or other investment dealer, in connection with the payment of retiring benefits. The setting up of a book reserve without an accompanying segregation of assets will not create an RCA.  However, since, depending on the particular facts, an employer may also be a custodian of a plan, we are not in a position to express a general view when assets are segregated. In the situation described by you, the determination as to whether these arrangements would be RCAs would have to be made after consideration of the relevant facts. For instance, if the terms of the arrangement are such that the deposits are held by a custodian (e.g. a bank or the employer) in trust, contingently or otherwise, for the benefit of the board's employees, this would suggest, albeit not conclusively, that the arrangement was an RCA.

We trust our reply is satisfactory to your needs.

Yours truly,

for DirectorFinancial Industries DivisionRulings Directorate