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: Benefits permitted under section 146(2)(c.4)
This is in reply to your letter of October 23, 1990, requesting our opinion whether preferential pricing on registered retirement saving plans ("RRSPs") for certain groups was allowed.
RRSP Loans
We consider a rate of interest on loans for RRSP contributions that is more favourable than the rate offered by the same issuer on non-RRSP loans on similar terms an advantage for the purpose of paragraph 146(2)(c.4) of the Income Tax Act (the "Act").
It is therefore a question of fact in each case whether or not an advantage has been extended to an RRSP annuitant as a result of a low interest rate loan.
With respect to the particular facts set out in your letter, it would appear that a more favourable rate of interest on RRSP loans will be extended to members with existing RRSPs or who transferred RRSPs from other financial institutions. As such an advantage under paragraph 146(2)(c.4) of the Act would be created.
Preferred Rates for Employees
In our opinion, any interest, bonus or otherwise, paid into a RRSP is not an advantage to the annuitant in the context of paragraph 146(2)(c.4) of the Act.
In the particular case set out in your letter it states that you would pay a higher rate of interest to employee than non-employee customers on the same type of RRSP. In our view the additional interest paid on the RRSP would be a benefit from office or employment under paragraph 6(1)(a) of the Act as the employee receives the benefit as a result of the employee's office or employment.
It should be noted that the Department of Finance has proposed an amendment to the Act adding a new subsection 146(13.1). As a result of this proposed amendment, an RRSP would no longer be deregistered where an advantage is extended to an annuitant thereof. However, a penalty of the greater of $100 and the amount or value of the advantage would be assessed on the issuer of the RRSP and would be exigible in respect of each RRSP where such an advantage has been extended to the annuitant.
We trust the above comments will be of assistance to you.
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© Her Majesty the Queen in Right of Canada, 1990
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© Sa Majesté la Reine du Chef du Canada, 1990
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