7-911298 24(1)
Subject: Superannuation Fund (the "Fund")
We are writing in reply to your memorandum of February 6, 1991, and your facsimile transmission of February 26, 1991, referred to us by Taxpayer Assistance Section, Assessing and Enquiries Directorate, on May 9 and May 14, 1991, respectively. You asked whether employee contributions to the above noted Fund result in the application of the RRSP deduction limits set out in paragraph 146(5)(a) or to the limits set out in paragraph 146(5)(b) of the Income Tax Act (the "Act") as those provisions read for the taxation years 1987 through 1990.
If a taxpayer employee is the only person who contributes to the Fund in respect of his or her employment in 1987 and 1988, then the higher deduction limits in paragraph 146(5)(b) of the Act apply for RRSP contributions for those taxation years. However, in the situations you describe it is not possible to determine in 1987 and 1988 whether employer contributions in subsequent years (i.e. after retirement) will or might relate to the taxpayer employee's employment in 1987 and 1988. Therefore, the lower limits in paragraph 146(5)(a) of the Act apply.
With respect to the 1989 and 1990 taxation years the employee was "employed in the year" and "as a consequence therefore ... may become entitled to benefits under" the Fund in respect of (his/her) employment in the year". In these cases the employees may receive a benefit after retirement in the form of a refund of contributions made in 1989 and 1990 and, therefore,the limits in paragraph 146(5)(a) of the Act apply.
A copy of this memorandum is being forwarded to the Taxpayer Assistance Section and they will contact you with respect to your queries concerning adoption of an administrative position and adjustments for prior years.
We trust the foregoing explanation assists you.
for DirectorFinancial Industries DivisionRulings Directorate
c.c.: Michel Proulx Enquiries and Taxpayer Assistance Division