3 June 1992 Administrative Letter 9214426 F - Splitting RRSP Annuity Income

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.

June 3, 1992

T1 Programs DivisionFinancial Industries DivisionJ. M. Legault, Director

Attention:  Mrs. N. KellyAssessments Manager

RRSP Annuities

We note that a copy of the attached memorandum from the Surrey Taxation Centre was forwarded to you. Since the primary issue is one of obtaining conformity among payers of RRSP annuities of the correct manner in which T4RSP's should be prepared, an administrative matter within your jurisdiction, we ask that you reply directly to the memorandum.  Our comments are as follows.

Except where the attribution rules might apply, payments from an annuity acquired with RRSP funds are taxable only in the hands of the annuitant.  The confusion may come from the wording of clause 146(1)(i.1)(i)(B) of the Act which provides that the amount of the annuity payments may be based on "the lives, jointly, of the annuitant and his spouse and to the survivor of them for his life".  However, the application of that clause merely affects the amount of the annuity payments, not to whom they are payable.  That is, paragraph 146(1)(i.1) clearly provides that the annuity payments, regardless of the actuarial assumptions used in determining their amount, are at all times to be payable solely to the annuitant.  Thus, the only time the spouse would include an amount in her income with respect to the annuity payments would be when she becomes the annuitant, as defined in paragraph 146(1)(a) of the Act, on the death of her husband.

Although the RRSP issuer may have provided the annuities in question such that form T2037 was not relevant in the sample cases referred to by the Surrey TC, you may nevertheless want to suggest to the Registrations Division that it be specifically stated somewhere on the form (and perhaps also in IC74-1R5) that the annuity payments are taxable solely in the hands of the annuitant.

for DirectorFinancial Industries DivisionRulings Directorate