Principal Issues: What amounts paid out of an RRSP or a RRIF to a taxpayer who is under 65 are eligible for the pension split?
Position: Only amounts received as a consequence of the death of the taxpayer's spouse or common-law partner.
Reasons: limitation of the provisions
August 20, 2008
XXXXXXXXXX
Dear XXXXXXXXXX :
Your Member of Parliament, XXXXXXXXXX , forwarded to me a copy of your email, which I received on June 9, 2008, concerning the eligibility of amounts received from a registered retirement savings plan (RRSP) or a registered retirement income fund (RRIF) for the pension tax credit and pension income splitting under the Income Tax Act.
The Act allows a taxpayer under 65 years of age at the end of the calendar year to claim a pension credit and to split eligible pension income with his or her spouse or common-law partner if the taxpayer has received qualified pension income. The Act specifically defines "qualified pension income" to include life annuity payments out of a registered pension plan, whether it is a public-sector or a private-sector plan, and payments out of an RRSP or a RRIF that are received due to the death of the taxpayer's spouse or common-law partner. Other amounts paid out of an RRSP or a RRIF are not included in the definition. I must therefore confirm that a taxpayer under 65 receiving RRSP or RRIF payments, other than as a result of the death of the taxpayer's spouse or common-law partner, is not eligible for the pension tax credit for these payments and is not eligible to split these payments with his or her spouse or common-law partner.
The Canada Revenue Agency (CRA) is responsible for administering and enforcing the Act and the Income Tax Regulations as enacted by Parliament. Any proposed changes to tax policy or amendments to legislation would have to be considered by the Minister of Finance and approved by Parliament. I am therefore forwarding a copy of your correspondence to the Honourable James M. Flaherty, Minister of Finance, for his consideration.
I trust that the information provided clarifies the position of the CRA on this matter.
Sincerely,
The Honourable Gordon O'Connor, P.C., M.P.
c.c.: The Honourable James M. Flaherty, P.C., M.P.
Minister of Finance
House of Commons
Ottawa ON K1A 0A6
Wayne Harding
(613) 957-9769
June 16, 2008
2008-028126