| Supply and Services Canada | |
| Place du Portage | File No. 5-8890 |
| 11B1, Phase III | D.S. Delorey |
| Ottawa, Ontario | 957-3495 |
| K1A 0S5 |
Attention: Jan Norris Advisory Officer Advisory Services - Pay Products GroupPersonnel Products Branch Accounting, Banking and Compensation Directorate
November 7, 1989
Dear Ms. Norris:
This is in reply to your letter of October 13, 1989 concerning the allowable limits under subsection 60(j.1) if the Income Tax Act (the "Act") with respect to the rollover of a retiring allowance to a registered retirement savings plan ("RRSP").
Details with respect to the particular employee involved are as follows:
24(1)
Interpretation Bulletin IT-337R2, a copy of which is enclosed for your perusal, comments on the limitations set out in subsection 60(j.1) of the Act with respect to the transfer to an RRSP of a retiring allowance received from an employer. As indicated therein, the amount deductible by the above employee cannot exceed the aggregate of
(a) $2,000 times the number of years he was employed by the employer or a related person (subparagraph 60(j.1)(ii)(A) or the Act), and
(b) $1,500 times the number of years by which the number of years described in (a) above exceed the equivalent number of years in respect of which employer contributions to a pension plan vested in the employee (subparagraph 60(j.1)(ii)(B) of the Act). If legislation is enacted as proposed, the years used in this computation will be limited to pre-1989 years.
As indicated in paragraph 13(a) of IT-337R2, part of a year counts as one year for the purposes of the above computations.
24(1)
You suggest in your letter that the above maximum of 24(1) Subparagraph 60(j.1)(ii)(C) of the Act does provide for a reduction but only where a deduction was previously made under subsection 60(j.1). Since the application of subsection 60(j.1) is limited to retirements occurring after November 12,1981, any such previous transfer by the employee would obviously be made before that time and, thus no such reduction is required in this instance.
We trust that the above comments will be of assistance.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate