Section 147

Where a corporation controls a partnership which in turn owns all the shares of an employer, the corporate partner will not be considered to deal at arm's length with the employer, and the controlling partner's share in the profits of the partnership will be considered to be profits from the business of the (partner) corporation.

Funds in an DPSP cannot be split on a marriage breakdown given the prohibition against assignment in s. 147(2)(e). If funds are paid directly to a spouse or former spouse of a participating employment, the payment must be made at the request and direction of the employee and reported on a T4A as the employee's income.

Although a pension plan could have two separate trusts relating to two sets of defined benefit provisions, if the plan was adequately funded an employer would not be able to make a contribution on the basis that assets relating to one of the defined benefit provisions were deficient.

Where contributions are made by a Canadian employer to a registered pension plan in respect of an employee who has moved to the United States but continues to be employed in Canada by it, the fact that the individual is also an employee a U.S. company will not by itself affect the deductibility of the amounts paid by the Canadian company.

Would an employer's contribution to a DPSP be deductible from income even if the contribution resulted in a business loss, for example, a taxpayer making a profit of $5,000 before paying a DPSP contribution of $9,000? CCRA responded:

[T]he Act does not prevent an employer from paying an amount to a DPSP and deducting that amount from income solely because the payment will create a business loss. However, contributions for a taxation year must be calculated "by reference to profits" or "out of profits" and paid in accordance with the terms of the plan. They must have been paid within the time limits set out in subsection 147(8) and must not have been deducted in computing the employer's income for a preceding taxation year.

[Here] the mere fact that the contribution creates a $5,000 operating loss will not prevent the employer from contributing to the DPSP or deducting the contribution in income for the year, if the contribution is otherwise deductible and complies with the terms of the DPSP.

Even if a deferred profit sharing plan can be considered primarily "an agreement to issue shares", the treatment under s. 147 is more specific and, therefore, paramount to the provisions of s. 7.

In the course of a general discussion, and after describing the persons referenced in s. 147(2)(k.2) who came within the ambit of s. 147(10.3), CRA stated:

Subsection 147(10.3) provides that there shall be included in computing the income for a taxation year of such a person the total of amounts allocated or reallocated to the beneficiary in the year in respect of any amount contributed after December 1, 1982 by an employer to, or any forfeited amount under a deferred profit sharing plan or a plan the registration of which has been revoked pursuant to subsection 147(14) or 147(14.1). In the situation where subsection 147(10.3) applies, no amount should be entered in Box 14 of the T4 slip in respect of the amounts referred to in that subsection.

Regarding what amounts DPSP members may withdraw, either in whole or in part, from the DPSP while remaining employed by the employer, CRA indicated that such withdrawals could be made under s. 147(2)(k), and then stated:

A direct transfer of an amount complies with subsection 147(19) if it is made on behalf of an individual from a DPSP to an RPP, to the individual's RRSP or to another DPSP for the benefit of the individual. An amount is transferred in accordance with this subsection only if it is not part of a series of periodic payments. Only amounts that would be included in computing the individual's income under subsection 147(10), if paid directly to the individual, may be transferred under this subsection. A transfer can only be made on behalf of an individual if:

• the individual was an employee or former employee of an employer who participated in the plan on behalf of the employee;
• the individual was, on the date of death of the employee or former employee, the spouse of the employee or former employee (see Glossary) and is entitled to the amount because of the death of the employee or former employee. …

[T]he provisions in paragraph 147(2)(k) and subsection 147(19) apply even if the members are employees when withdrawing or transferring funds from a DPSP.