Principal Issues: Can a lump sum amount be transferred from an RRSP to a UK pension plan on a tax free basis
Position: no
Reasons: there is no provision in the Act that allows for such a transfer of a lump sum amount
April 30, 2009
XXXXXXXXXX
Dear XXXXXXXXXX :
The office of the Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your email, which I received on March 20, 2009, concerning the transfer of funds held in your registered retirement savings plan (RRSP) to a pension plan in the United Kingdom where you are now resident.
I understand that Mr. Wayne Harding, a senior rulings officer with the Income Tax Rulings Directorate of the Canada Revenue Agency (CRA), telephoned you on March 26, 2009, and left a message advising that the Income Tax Act does not provide for tax-free transfers of funds from an RRSP to a U.K. pension plan.
Under the Act, a payment of funds from an RRSP to a non-resident is generally subject to a tax rate of 25%. However, the Act also allows non-residents to file an individual income tax return in respect of these payments if it is more advantageous to do so. The CRA publishes Pamphlet T4145, Electing Under Section 217 of the Income Tax Act, which explains this election in detail. I am attaching a copy for your convenience.
Should you have any further questions, I invite you to contact Mr. Harding by writing to the Income Tax Rulings Directorate, 17th Floor, Tower A, Place de Ville, 320 Queen Street, Ottawa ON K1A 0L5, CANADA, or by calling 613-957-9769. The CRA accepts collect calls. You can also send him an email at wayne.harding@cra-arc.gc.ca. Mr. Harding is aware of our correspondence and will be pleased to assist you.
I appreciate the opportunity to respond to your concerns.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Attachment
Wayne Harding
(613) 957-9769
2009-031504