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.
CALU ANNUAL MEETING May 11, 1992Question 9 RETIREMENT COMPENSATION ARRANGEMENTSDRAFT/EBAUCHE Supplementary retirement income benefits may be secured for employees with a bank letter of credit. The amounts payable under the letter of credit may be the actuarial present value of the future retirement income benefits or may be the monthly retirement income payments. What is the Department's position where a bank letter of credit is used to secure retirement income benefits? Also, how is this position affected if the employer acquires insurance policies on the lives of the employees and pledges such policies to the bank as security for the letters of credit?
Department's Position It is the Department's position that the fair market value of the letter of credit would be considered as a contribution to a retirement compensation arrangement. The provision of insurance policies as security for the letters of credit would also result in a deemed retirement compensation arrangement by virtue of subsection 207.6(2) of the Act.
Author: David Duff
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