Section 147

Subsection 147(1) - Definitions

Deferred Profit Sharing Plan

Administrative Policy

8 November 2004 Internal T.I. 2004-0093441I7 - DPSP - Contributions Based on US Parent's Profits

An employer could base its contributions solely on the profits of its U.S. parent.

Subsection 147(2) - Acceptance of plan for registration

Administrative Policy

27 October 1994 T.I. 942454 (C.T.O. "Profit Sharing Plan for Corporate Partner")

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.

8 December 1993 External T.I. 9332125 - HAA 7209-1 DIVISION OF DPSP ON MARIAGE BREAKDOWN

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.

19 November 1992 Memorandum 923036 (September 1993 Access Letter, p. 424, ¶C144-240)

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.

21 September 1992 T.I. (Tax Window, No. 24, p. 22, ¶2205)

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.

IC 77-1R4 "Deferred Profit Sharing Plans"

Paragraph 147(2)(k)

Administrative Policy

27 April 2009 External T.I. 2008-0304761E5 F - Retraits et transferts provenant d'un RPDB

s. 147(2)(k) available even while member still an employee

Regarding what amounts DPSP members may withdraw, either in whole or in part, from the DPSP while remaining employed by the employer, CRA stated:

By reason of the text in paragraph 147(2)(k) before subparagraph (i), a DPSP may permit its members to withdraw all or part of their accrued entitlements under the plan while remaining employees.

After also discussing s. 147(19), CRA concluded:

In our view, the 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.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 147 - Subsection 147(19) s. 147(19) available even while member still an employee 236

Subsection 147(8) - Amount of employer’s contribution deductible

Administrative Policy

20 January 1994 External T.I. 9400755 - EBP'S, EPSP'S, DPSP'S AND SECTION 7

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.

Subsection 147(10) - Amounts received taxable

Cases

The Queen v. Powell, 80 DTC 6301, [1980] CTC 382 (FCTD)

When a beneficiary elected to close out his account the "amounts received" by him included, under the broad meaning of that phrase, shares of Shell Canada Limited that had been held under the plan.

Subsection 147(10.3)

Administrative Policy

19 May 2011 External T.I. 2011-0405431E5 F - RPDB et feuillet T4

T4 reporting-treatment of DPSP benefit to s. 147(2)(k.2) persons

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.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) - Subparagraph 6(1)(a)(i) no T4 reporting for employer DPSP contribution 110
Tax Topics - Income Tax Regulations - Regulation 8301 - Subsection 8301(2) T4 reporting by DPSP employer of pension adjustment 169

Subsection 147(19)

Administrative Policy

27 April 2009 External T.I. 2008-0304761E5 F - Retraits et transferts provenant d'un RPDB

s. 147(19) available even while member still an employee

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.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 147 - Subsection 147(2) - Paragraph 147(2)(k) s. 147(2)(k) available even while member still an employee 99