Before finding that the purchase of RRRSP property (the “Co-op” shares) by the RRSP’s annuitant at cost was to be treated as the payment of a premium by the annuitant to the extent of the excess over the property’s fair market value, CRA stated:
You advised us that the annuitant and the trust that governs the annuitant’s RRSP are not related persons within the meaning of paragraph 251(1)(b), since the trust is described in paragraph (a) of the definition of "trust" in subsection 108(1) … . However … the fact that the annuitant and his RRSP are not deemed to be related persons under paragraph 251(1)(b) does not mean that they are not otherwise not dealing with each other at arm's length at any particular time within the meaning of paragraph 251(1)(c). The Agency's position is that the annuitant and the trust governing the annuitant's RRSP generally do not deal with each other at arm's length within the meaning of paragraph 251(1)(c). In any event, the very fact that the annuitant is prepared, in order to acquire units of the Co-op from the RRSP, to pay an amount that exceeds their FMV, which is nil … confirms in our view that the annuitant and the trust governing the RRSP do not deal at arm's length in this transaction.