Subsection 207.5(1) - Definitions
Advantage
Administrative Policy
29 October 2013 External T.I. 2013-0501941E5 - RCA transitional rule
//www.parl.gc.ca/HousePublications/Publication.aspx?DocId=5765988&File=41">: Subsection 44(3) of Bill C-45 introduces anti-avoidance rules, s....
5 October 2012 Roundtable, 2012-0453141C6 F - RCA, prohibited investment
Does the concept of "advantage" in s. 207.01(1) apply to a split-dollar arrangement where the RCA holds the cash surrender value of the insurance...
Articles
Jillian Welch, "Retirement Compensation Arrangements: an Update on the Advantage Rule", Taxation of Executive Compensation and Retirement Special Pension Edition, Volume XVII, No. 3, 2013, p. 1074.
Targeting of loan-back structures (p. 1074)
The Department of Finance borrowed these rules as a mechanism to deal with certain so-called "loan...
Paragraph (a)
Administrative Policy
16 September 2016 Internal T.I. 2013-0500581I7 - RCA advantage tax rules
In finding that the advantage tax in s. 207.62 applied where a specified beneficiary of an RCA assigned their rights to receive distributions from...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 207.62 - Subsection 207.62(2) - Paragraph 207.62(2)(a) | FMV of pledging benefit equal to PV of interest savings | 104 |
14 December 2015 External T.I. 2013-0499501E5 - RCA advantages-Life insurance policy held by an RCA
An RCA trust acquires and holds a universal life insurance policy on the life of the individual who is the sole specified beneficiary of the RCA....
14 December 2015 External T.I. 2014-0544211E5 - RCA advs - Life insurance policy held by an RCA
2013-0481421C6 concerned an RCA holding a life insurance policy that provided more than a nominal death benefit where, after indicating that the...
17 May 2013 Roundtable, 2013-0481421C6 - Transfer of life insurance policy to a retiree
A corporation is the owner and beneficiary of an insurance policy on the life of a senior executive officer, who is also a shareholder, which was...
RCA Strip
Administrative Policy
15 May 2017 External T.I. 2015-0580461E5 F - Life insurance policy held in an RCA trust
CRA considered, respecting an RCA trust with an employee as its sole beneficiary, that its “holding of a life insurance policy with life...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 207.5 - Subsection 207.5(3) | s. 207.7(2) refund might be generated where an RCA trust distributes a life insurance policy to its employee beneficiary | 336 |
Refundable Tax
See Also
Martin v. The King, 2024 TCC 153
Gagnon J provided (at paras. 76-77) the following overview of the RCA rules before finding that 100% of contributions made to the RCAs of US...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 115 - Subsection 115(1) - Paragraph 115(1)(a) - Subparagraph 115(1)(a)(i) | total income of athletes was apportioned to Canada and the US before applying the domestic income-computation rules to their Canadian-source income | 935 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Salary Deferral Arrangement | taxpayers' RCAs were not SDAs because they provided for reasonable pensions | 501 |
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) - Subparagraph 6(1)(a)(ii) | s. 6(1)(a)(ii) exclusion applied only after the computation of the non-resident taxpayers’ Canadian-source income | 531 |
| Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) | RCA contributions would be employment income under ss. 5(1) or 6(1)(b) absent the s. 6(1)(a)(ii) exclusion | 393 |
| Tax Topics - Treaties - Income Tax Conventions - Article 15 | US baseball players were taxable only on their income generated in playing in Canada | 139 |
Administrative Policy
12 January 2015 External T.I. 2013-0511051E5 - Employer loan to RCA
A loan by the employer to the RCA, equal to the refundable tax balance, is used by the RCA will pay a lump-sum amount to an employee to terminate...
22 March 2005 External T.I. 2005-0112081E5 F - Convention de retraite - lettre de crédit
The employer for an RCA trust contributed to it an amount equaling the fee payable by the trust to a financial institution for issuing a letter of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 207.7 - Subsection 207.7(2) | where LC used to secure RCA benefits and refundable tax generated on funding of LC fees, refundable tax not recoverable based on paying the benefits | 386 |
| Tax Topics - Income Tax Act - Section 207.5 - Subsection 207.5(2) | election not available to custodian holding an LC | 217 |
12 March 1996 Internal T.I. 9531287 - CONTRIBUTIONS TO RCA'S
Where an employer directly acquires a letter of credit from a bank for the benefit of its employees, it will be considered to have established a...
28 June 1995 CTF Roundtable, 9508496 - NON-FUNDED SUPPLEMENTAL PENSION PLANS
"Where a trust governed by an RCA obtains an LOC [Letter of Credit] and, in addition to the fee charged by the bank to the trust, the employer...
92 C.R. - Q.49
Where a registered pension plan has its registration revoked and thereby immediately becomes a retirement compensation arrangement, Part XI.3 tax...
88 C.R. - Q.30
All contributions to a RCA, whether from the employer or the employee, are included.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 207.6 - Subsection 207.6(2) | 32 |
Articles
Jim Kahane, Uros Karadzic, Simon Létourneau-Laroche, "A Fresh Look at Retirement Compensation Arrangement: A Flexible Vehicle for Retirement Planning", Canadian Tax Journal (2013) 61:2, 479 – 502.
Refund mechanics (p. 485)
When the employer makes a contribution to an RCA, one-half of the contribution must be remitted to the CRA [fn 22:...
Manjit Singh, Jillian Welch, "Retirement Compensation Arrangements and the Prohibited Investment and Advantage Rules", Taxation of Executive Compensation and Retirement, Special Pension Edition, Volume XVI, No. 4, 2012, p. 1041: The article initially provides the following overview of the statutory scheme:
Generally, employers and employees are entitled to a deduction from income in respect of contributions they make to an RCA. [fn. 2: Paragraph...
Paragraph (a)
Administrative Policy
2017 Ruling 2016-0655071R3 - Supplemental employee retirement plan
Background
Holdco (a taxable Canadian corporation) holds all the shares of Opco, as its only asset other than cash. Holdco’s common shares are...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 207.5 - Subsection 207.5(1) - Subject Property of a Retirement Compensation Arrangement | no subject property created when sub with SERP obligations is wound-up | 174 |
2018 Ruling 2017-0720901R3 - Use of a Surety Bond by RCA
Background (current LC structure)
The company maintains a non-registered supplemental employee retirement plan (the “SERP”), which is a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(r) | contributions (including re Pt XI.3 tax) for funding surety bond fees, currently deductible | 224 |
Paragraph (b)
Administrative Policy
26 May 2009 External T.I. 2009-0316841E5 F - Convention de retraite, crédit d'impôt étranger
Regarding the deductibility of foreign tax paid on non-business income in computing income for purposes of the Part XI.3 tax on retirement...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | no foreign tax credit can be claimed for non-business income tax paid on income of RCA trust | 91 |
4 November 2003 External T.I. 2003-0042295 F - CONVENTION DE RETRAITE REVENU D'INTERET
Is an RCA trust subject to the provisions of s. 12 in determining its refundable tax under Part XI.3? CCRA responded:
The determination of the...
15 September 2003 External T.I. 2003-0033405 F - CONVENTION DE RETRAITE INTERETS COURUS
Where an RCA trust holds strip bonds and debentures with interest payable at maturity, should such interest income be recognized only at maturity...
Paragraph (c)
Administrative Policy
18 May 2017 Roundtable, 2017-0692331C6 - CLHIA 2017 Q3 - RCAs
In connection with a supplemental executive retirement plan (the “Plan”), the Employer established a trust and made annual contributions to it...
Specified Beneficiary
Articles
Manjit Singh, Jillian Welch, "Retirement Compensation Arrangements and the Prohibited Investment and Advantage Rules", Taxation of Executive Compensation and Retirement, Special Pension Edition, Volume XVI, No. 4, 2012, p. 1041, at 1042
The definition allows an RCA to have more than one specified beneficiary. Moreover, it appears that the phrase "had a significant interest in...
Subject Property of a Retirement Compensation Arrangement
Administrative Policy
2017 Ruling 2016-0655071R3 - Supplemental employee retirement plan
Opco, which formerly had an active business, but now is inactive, is obligated to pay supplemental executive pension benefits to former executive...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 207.5 - Subsection 207.5(1) - Refundable Tax - Paragraph (a) | the distribution to a non-resident parent of assets of a subsidiary that had SERP obligations and the assumption of such obligations did not create an RCA | 508 |
Subsection 207.5(2) - Election
Administrative Policy
7 July 2014 External T.I. 2013-0511061E5 - Change in custodian of an RCA
Refundable tax builds up under a RCA trust where the retirement benefits are secured by way of a letter of credit held by the RCA trust. In order...
22 March 2005 External T.I. 2005-0112081E5 F - Convention de retraite - lettre de crédit
The employer for an RCA trust contributed to it an amount equaling the fee payable by the trust to a financial institution for issuing a letter of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 207.7 - Subsection 207.7(2) | where LC used to secure RCA benefits and refundable tax generated on funding of LC fees, refundable tax not recoverable based on paying the benefits | 386 |
| Tax Topics - Income Tax Act - Section 207.5 - Subsection 207.5(1) - Refundable Tax | use of letter of credit to secure RCA benefits | 173 |
31 March 1995 External T.I. 9502955 - LETTER OF CREDIT-RCA
"Where all the property of a RCA has been distributed, the custodian may choose to apply subsection 207.5(2) of the Act. In such a situation,...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(n.3) | cancellation of LC | 79 |
31 January 1994 External T.I. 9336855 F - Closing Out RCA Refundable Tax Account
The proper method to obtain the balance of an RCA's refundable tax is to elect under s. 207.5(2) in the year the final distribution of property is...
Subsection 207.5(3)
Administrative Policy
15 May 2017 External T.I. 2015-0580461E5 F - Life insurance policy held in an RCA trust
An RCA trust transfers of a life insurance policy held by it to the employee who is the sole beneficiary of the RCA trust. Could s. 207.5(2) be...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 207.5 - Subsection 207.5(1) - RCA Strip | holding of life insurance policy could entail RCA strip | 228 |