Words and Phrases - "under"
10 March 2004 External T.I. 2002-0160751E5 F - REÉR au décès: rente pour un bénéficiaire mineur
The annuitant of a registered retirement savings plan ("RRSP") died, leaving his RRSP in trust for his minor child. The executor of the estate will acquire an annuity equal in value to the value of the RRSP, with a term equal to 18 years minus the age of the minor child, with the estate (a trust) as the annuitant. Under the terms of the will, the trustee could use all or part of the income or capital of the trust for the child's needs at the trustee’s sole discretion, with the capital distributed to the child at specified times. In the event of the death of the beneficiary before having received all of the trust assets, the residue would vest in the intestate heirs of the beneficiary. Thus, the minor child will not receive the annuity benefits annually, and their payment will at the trustee’s discretion.
A second Scenario varies the first in that if the beneficiary dies, the residue is distributed to another person determined by the testator.
In a third Scenario, all annuity payments would be required under the will to be paid to the child annually.
Can the minor child be considered, in these Scenarios, to have sole beneficial interest in the amounts payable under the annuity as required by s. 60(l)(ii)(B) as it was proposed to be amended [which stipulated that the annuity be one "under which the taxpayer, or a trust under which the taxpayer is the sole person beneficially interested in amounts payable under the annuity, is the annuitant …"]? CRA responded:
February 27, 2004 … Legislative Proposals … indicate … that the child will be able to benefit from the provisions of paragraph 60(l) as long as the child is the only beneficiary of the trust, before the child’s death, who has an interest in the amounts payable under the annuity.
Nowhere in the Act is the expression "amounts payable under the annuity" defined. … Pratte J.A. in Bensol Customs Brokers … explain[ed] the scope of the word “under”: "A claim is made under a statute, in my view, when that statute is the law which, assuming the claim to be well founded, would be the source of the plaintiff's right". …
Under this analysis, therefore, the annuity must be the source of the beneficiary's right to collect. … [I]t is our view that the annuities described in these Scenarios would be annuities described in clause 60(l)(ii)(B) to the extent that the Legislative Proposals are adopted.
12 June 2009 Internal T.I. 2008-0294921I7 F - Montant reçu à l'égard d'un surplus actuariel
On the sale by the Vendor of one of its business divisions, the employees of that division were transferred to the purchaser, and the assets of the defined benefit pension plan regarding those employees (the “Plan”) were transferred to the Purchaser and the Purchaser assumed the related pension commitments, in two transfers (which was permitted as a result of the approval of the Régie des rentes du Québec). There was an actuarial surplus respecting the Plan, which could allow the purchaser to enjoy a contribution holiday. On each transfer, the Purchaser paid an amount to the Vendor in respect of the actuarial surplus.
After finding that these amounts were taxable to the Vendor under s. 9, CRA went on to indicate that, in the alternative, that they were taxable under s. 56(1)(a)(i). In particular, they constituted the receipt by the Vendor of “superannuation or pension benefits.” Although they were not superannuation or pension benefits in the ordinary meaning of that phrase, under the s. 248(1) definition, it would be reasonable to regard such amounts as having been received “under” the Plan, as they would not have been received but for the actuarial surplus that arose under the Plan. In addition, “the Plan was modified as a result of the transfer of members to the Plan and the transfer of a portion of the assets and liabilities of the Plan to the Purchaser's plan” and such transfer would not have been possible without approval of Retraite Québec. Thus, the amounts were received by the Vendor as a result of a “modification” of the Plan (even though there was no change to its terms), so that para. (b) applied to render the payments as superannuation or pension benefits.
Dominion of Canada General Insurance Co. v. The Queen, 86 DTC 6154, [1986] 1 CTC 423 (FCA)
Stone JA stated (at p. 6163) that the words of s. 85B(1)(e) (now, s. 12(1)(e)) "are directed toward the inclusion in income of an 'amount' that was 'deducted' in the previous year and not toward an amount that was 'deductible' in that year." Where an amount was in fact deducted in a previous year by a taxpayer purporting to comply with the provisions of what now is s. 20(1)(m), that amount was to be brought into income under s. 12(1)(e) notwithstanding that the deduction in the previous year may not have been properly taken. "This is particularly so where, as here, the assessment of that [previous year's] income has been made and accepted and cannot now be challenged" (p. 6164).