Principal Issues: Correction to paragraph reference in the Income Tax Act.
Position: Reference to paragraph 56(1)(h) in Question 5 of 2005-012016 should be paragraph 56(1)(d.2).
Reasons: Reference should be to paragraph 56(1)(d.2).
XXXXXXXXXX 2005-014660 G. Allen August 18, 2005
Dear XXXXXXXXXX:
Re: Settlement Annuity - RRSP
This letter is in response to your letter dated March 8, 2005 and further to our letter dated July 20, 2005, reference number 2005-012016. The purpose of this letter is to revise the reference to the taxing provision of the Income Tax Act (the "Act") as provided in Question 5 in our July 20, 2005 response.
Specifically, the reference to paragraph 56(1)(h) should be revised to paragraph 56(1)(d.2) such that Question 5 should read as follows:
"In our view, provided the settlement annuity purchased, in the circumstances described in Question 4, is an annuity described in subparagraph 60(l)(ii) of the Act, the periodic annuity payments paid from the settlement annuity would be taxable under paragraph 56(1)(d.2) of the Act."
We apologize for any inconvenience that this change may cause.
Yours truly,
Roberta Albert, CA
Manager
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Policy and Planning Branch