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:
Re: Retirement Compensation Arrangement ("RCA") Letter of Credit
This is in reply to your letter of January 22, 1991, concerning the above-mentioned subject matter.
It is our opinion that, in a situation such as the one you described in your letter, that it is the fair market value of a letter of credit acquired by an employer and transferred to a trustee for the benefit of an employee or employees which would be considered as a contribution by the employer to an RCA and which would be subject to the refundable tax under Part XI.3 of the Income Tax Act at the time of the contribution. The fair market value of a letter of credit depends on the circumstance of this issue such as when it becomes payable, the restrictions on payment, the credit worthiness of the employer, the intent of the parties to the transaction, etc.
We trust the above comments will be of assistance to you.
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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