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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Whether a retiring allowance can be transferred to a spousal RRSP.
Position: No.
Reasons: Wording of the Act.
XXXXXXXXXX 5-982686
Fouad Daaboul
November 13, 1998
Dear XXXXXXXXXX:
Re: Retiring Allowance and Transfer to a Spousal RRSP
This is in reply to your facsimile submission of October 19, 1998, wherein you asked if you could transfer an amount of severance payment to a registered retirement savings plan (“RRSP”) under which your spouse is the annuitant. We also acknowledge our telephone conversation (XXXXXXXXXX/Daaboul) on October 22, 1998 in which we obtained clarification of the circumstances of the situation.
Written confirmation of the tax implications inherent in particular proposed transactions are given by this Directorate only where the transactions are outlined in an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R3. Questions concerning actual fact situations should otherwise be directed to your tax services office. Although we cannot provide a specific answer to your query, we offer the following general comments which are not binding on the Department.
Retiring allowance is defined in subsection 248(1) of the Income Tax Act (the "Act"). In order for a severance payment to qualify as a retiring allowance, the payment must be in recognition of long service or in respect of loss of an office or employment. In any particular case, the Department’s views is that the nature of a payment will be a question of fact which will only be determined after an examination of all the relevant facts.
Once the amount received has been established to be a retiring allowance and included in computing your income, paragraph 60(j.1) of the Act provides for a deduction, within the limits set out therein, with respect to an amount that could be transferred to your RRSP. There is no provision in the Act for the transfer of your retiring allowance to your spouse’s RRSP.
Beyond the limits for amounts that can be transferred to your RRSP in accordance with paragraph 60(j.1) of the Act, an amount can also be contributed to your RRSP or to your spouse’s RRSP within the limits set out in subsections 146(5) and 146(5.1) of the Act, respectively.
We trust our comments will be of assistance to you.
Yours truly,
Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings
and Interpretations Directorate
Policy and Legislation Branch
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