| 19(1) | File No. 5-8984 |
| D.S. Delorey | |
| (613) 957-3495 |
November 27, 1989
Dear Sirs:
Re: Self-directed Registered Retirement Savings Plans ("RRSPs")
This is in reply to your undated letter concerning the provisions of paragraph 198(6)(d) of the Income Tax Act (the "Act").
Subsection 198(6) of the Act provides that where the conditions set out in paragraphs 198(6)(c), (d) and (e) are met, the acquisition of an interest in or the payment of an amount under a life insurance policy shall be deemed not to be the acquisition of a non-qualified investment by a trust governed by a deferred profit sharing plan or, by virtue of subsection 146(11) of the Act, an RRSP. Generally speaking, the paragraph 198(6)(d) condition is that at some time before the 71st birthday of the insured, the cash surrender value of the policy must equal the maximum total amount payable by the insurer under the policy. As stated in paragraph 4(b) of Interpretation Bulletin IT-408R, accumulated dividends are excluded from the calculation.
You mention that since the enactment of subsection 198(6) of the Act, you have introduced 24(1)
24(1) For the purposes of our reply, we have assumed that all relevant amounts are exclusive of accumulated dividends.
The above comments reflect an expression of opinion only, which as indicated in Information Circular 70-6R is not binding on the Department. We trust however that they will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate