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: Tax consequences of using property in an RRSP as security for a loan.
Position: Included in the annuitant's income for the year under subsection 146(10). A deduction from income is allowed under subsection 146(7) when the loan ceases to exist.
Reasons: As per RRSPs rules in section 146 of the Act.
XXXXXXXXXX 2003-003942
C. Lalonde
April 7, 2004
Dear XXXXXXXXXX:
Re: Borrowing against the value of an RRSP
This is in response to your e-mail of September 18, 2003 concerning the income tax consequences of using property in a registered retirement savings plan (an "RRSP") as security for a loan.
If an RRSP uses or permits its property to be used as security for a loan, subsection 146(10) of the Income Tax Act ("Act") requires that the fair market value of the property be included in computing the annuitant's income for the year. In the year such a loan ceases to exist, a deduction from the annuitant's income is permitted under subsection 146(7) of the Act.
You may find more information on what constitutes a "qualified investment" for RRSP purposes in our Interpretation Bulletin IT-320R3 - Qualified Investments - Trusts Governed by Registered Retirement Savings Plans, Registered Education Savings Plans and Registered Retirement Income Funds. This bulletin is available from your local tax services office or on the internet at: http://www.ccra-adrc.gc.ca/E/pub/tp/it320r3/it320r3-e.html.
We trust that these comments will be of assistance.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Planning Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2004
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2004
Email this Content