24 July 1989 Ministerial Letter 58318 F - Trustee of an Employee Benefit Plan

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.

July 24, 1989

Dear Sirs:

This is in reply to your letter of July 5, 1989 concerning an annuity acquired by a trustee of an employee benefit plan (EBP) on behalf of certain retiring employees.

In order to avoid processing delays you requested our views with respect to having the trustee of the EBP arrange to have the insurance company make the monthly annuity payments (net of tax deductions) directly to the retired employees, and remit the tax deducted to the Receiver General rather than having the trustee carry out these activities.  We have no objection to these changes provided the trustee retains its primary responsibility for such activities.

You further requested our views regarding the transfer of the preparation of the year end information slips (t4A) from the trustee of the EBP to the insurance company.  Such slips would indicate that the payee is a member of X EBP, administered by the trustee.  We are concerned whether the insurance company is sufficiently familiar with the EBP rules in the Income Tax Act ("Act") to prepare the relevant information returns correctly (e.g., in the case of a trust governed by an EBP the trust could claim a deduction under paragraph 60(a) of the act in arriving at its income, however, the retired employees would not be eligible to claim a deduction under that provision).  We would prefer to have the trustee of the EBP retain this responsibility. If after reviewing this concern with the trustee and the insurance company you wish to pursue this issue further, we suggest that you do so by contracting the appropriate officials at the relevant District Taxation Office with the view to obtaining their agreement with your proposal.

We trust that our comments are sufficient for your purposes.

Yours truly,

for DirectorFinancial Industries DivisionRulings Directorate