| 24(1) | 5-902765 |
| W.C. Harding | |
| (613) 957-8953 |
19(1)
November 19, 1990
Dear Sirs:
This is in reply to your letter of October 2, 1990 wherein you requested our opinion on the application of the foreign property rules contained in Part XI of the Income Tax Act (the "Act") to a trust governed by a group RRSP as described in paragraphs 9 and 10 of Information Circular 72-22R7.
Group RRSPs are not recognized nor provided for under the provisions of the Act but have been allowed on an administrative basis, where, given the circumstances, it was expedient to do so in order to provide ease of plan administration. The relief was not intended nor should it be applied to extend any benefit which is not otherwise appropriate given the intent of the Act as it certain to RRSPs.
Where a plan member is allowed to direct how his contributions will be invested, it is our opinion that a single trust, as contemplated, may not exist and each annuitant may be considered to have a separate trust governed by a separate plan. Accordingly Part XI of the Act could not be applied to the common trust.
Notwithstanding the above, it is our understanding that the Department's Registration Directorate will upon examining a specific group plan, allow it to be operated as a single trust, as described in the Information Circular, if it is understood and agreed by all parties that each annuitant's portion of the trust will be treated as a separate trust governed by a separate plan for all purposes of the Act as it applies to RRSPs. Accordingly, while each annuitant's segment of the trust would be subject to Part XI of the Act as if it were a separate trust, the common trust could still benefit from its administration on a group basis.
We trust these comments are satisfactory, to your news.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate