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:
Explanation of grandfathering of RCA provisions.
Position:
Explained.
Reasons: N/A
962897
XXXXXXXXXX P. Spice
Attention: XXXXXXXXXX
September 19, 1996
Re: Retirement Compensation Arrangement ("RCA") Application to Pre-1987 Trust
This is in reply to your letter of July 26, 1996, and further to your telephone conversation (Duff/XXXXXXXXXX) of September 9, 1996, concerning the above-noted topic. In particular, you ask whether the provisions in the Income Tax Act (the "Act") regarding RCAs apply to a trust established before 1986.
By virtue of the transitional provisions respecting the definition of "retirement compensation arrangement" in subsection 248(1) of the Act, a plan established before October 9, 1986, (an "existing arrangement") is deemed not to be an RCA. However, and assuming there are no material alterations to the plan after October 8, 1986, a "statutory arrangement" is deemed to be established on January 1, 1988, and all contributions made under the existing arrangement after January 1, 1988, and property derived therefrom are deemed to be property held in connection with the statutory arrangement. Such a statutory arrangement is subject to the RCA rules including the refundable tax provisions in Part XI.3 of the Act.
An existing arrangement is considered an "employee benefit plan" for purposes of the Act.
Technical interpretations provide, in writing, the Directorate's interpretation of specific provisions of the Income Tax Act. When, however, a request for a technical interpretation relates to a proposed transaction, that person must request an advance income tax ruling rather than a technical interpretation. Revenue Canada tax services offices consider requests for written opinions on completed transactions and provide over-the-counter advice and assistance on general matters. Technical interpretations provided to the public are not income tax rulings and are not binding on the Department, nor is a fee charged for this service.
We trust our comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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