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.
Principal Issues: Are mortgage payments made by the annuitant to the RRSP on a mortgage held by the RRSP considered to be premiums and therefore deductible under 146(5) of the Act.
Position: NO they are not premiums and therefore not deductible.
Reasons: They would be considered mortgage payments and not premiums. Based on the definition of premium in 146(1) of the Act.
XXXXXXXXXX 2004-005723
M.P. Baldwin, CA
April 23, 2004
Dear XXXXXXXXXX:
Re: Request for technical interpretation - Subsection 146(5) of the Income Tax Act
This is in reply to your letter of January 12, 2004 requesting a technical interpretation on whether you can deduct your mortgage payments made into your registered retirement savings plan ("RRSP"). You presently have a mortgage in your RRSP under which you are the mortgagor and you make monthly mortgage payments to your RRSP. You have requested an interpretation on whether these mortgage payments can be considered a deductible premium pursuant to subsection 146(5) of the Income Tax Act (the "Act").
The particular situation outlined in your letter appears to relate to a specific transaction involving a specific taxpayer. As explained in Information Circular 70-6R5, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. Should your situation involve a specific taxpayer and a completed transaction, you should submit all relevant facts and documentation to the appropriate Tax Services Office for their views. However, we can offer the following general comments.
As noted in the glossary of Interpretation Bulletin IT-124R6, entitled "Contributions to Registered Retirement Savings Plan", a premium is defined as:
"Premium: A "premium" is defined in subsection 146(1) as any amount paid or payable under an RRSP:
- as consideration for a contract (as specified in paragraph (a) of the definition of "retirement savings plan" in subsection 146(1)) for a retirement income when the plan matures; or
- as a contribution or deposit (as specified in paragraph (b) of the definition of "retirement savings plan" in subsection 146(1)).
After 1991, except for purposes of paragraph (b) of the definition "benefit" in subsection 146(1) and paragraph 146(2)(b.3), a premium does not include a payment designated under subsection 146.01(3) or a repayment described in subparagraph (b)(ii) of the definition "excluded withdrawal" in subsection 146.01(1). (Amounts designated under subsection 146.01(3) are repayments of eligible amounts received pursuant to the Home Buyers' Plan. Repayments described in the definition of "excluded withdrawal" are essentially repayments of amounts that had been expected to become eligible amounts when withdrawn.)"
In our view, where an annuitant makes a payment to his or her RRSP trust as a contribution under the trust to be applied for the purpose of providing the annuitant with a "retirement income" (as defined in subsection 146(1) of the Act) on maturity, the payment is considered a payment of a "premium" as defined in subsection 146(1) of the Act unless it is a payment excluded in the conclusion to that definition.
Based on the facts in your letter, you as the mortgagor are making mortgage payments to your RRSP, which is the mortgagee. These payments are considered to be mortgage payments pursuant to the mortgage entered into between you and the RRSP and not premiums to an RRSP (as defined above). Consequently, the mortgage payments made by you to the RRSP would not be deductible pursuant to subsection 146(5) of the Act.
We trust that the above comments will be of assistance to you.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
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