5-910589
Dear Sirs:
Re: Pension Plan Split on Marriage Breakdown
This is in reply to your letter of February 25, 1991 concerning the above-mentioned subject.
As indicated in Information Circular 70-6R2, we do not express opinions on specified proposed transactions other than as a reply to an advance income tax ruling. As a consequence thereof, we may only offer the following general comments.
Where pursuant to the provisions of the law of a province, there is a division of one spouse's rights (member spouse) under a Registered Pension Plan ("RPP") in favour of the other spouse (non-member spouse) on the breakdown of their marriage, it is our opinion that the payment of the portion of the RPP to the non-member spouse should be included in the income of the non-member spouse pursuant to subparagraph 56(1)(a)(i) of the Income Tax Act (the "Act").
Subsection 147.3(5) of the Act permits the direct transfer of a lump sum amount from one RPP to another or to a Registered Retirement Savings Plan for the benefit of the spouse or former spouse of a plan member, where the amount is transferred pursuant to a court order or written agreement relating to a division of property on marriage breakdown.
Where a lump sum amount is transferred in accordance with subsection 147.3(5) of the Act, the amount would not, by reason only of that transfer, be included by reason of subparagraph 56(1)(a)(i) of the Act in computing the income of the spouse and would not be deductible by the member spouse.
As for the wording of the Agreement, it is not the Department's role to suggest the terms to be used. The Department can only offer comments on the terms of an Agreement which is submitted for said purpose.
We trust the above comments will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate