Mr. A, a status Indian, who obtained rights in a registered pension plan through employment earnings that were exempted under s. 87 of the Indian Act, had such RPP funds transferred to his RRSP (“Trust A”) which, again at his direction, acquired units (valued by CRA as having a nil value), with Mr. A then receiving a loan from the cooperative.
After finding that the s. 87 Indian Act exemption did not apply to the amounts received by Mr. A, the Directorate stated:
Paragraphs 146(9)(a) and (b) have the effect of adding to the income of an annuitant under an RRSP trust the difference between the FMV of the property acquired by the trust and the consideration given for the property acquired … . Similarly, subsection 146(10) has the effect of adding to the income of an annuitant under an RRSP trust the FMV of any property of the trust used or permitted to be used by the trust as security when the property began to be so used … .