| 19(1) | 5-902832 |
| M.P. Baldwin | |
| (613) 957-3499 |
November 21, 1990
Dear Sir:
Re: Contribution to an Registered Retirement Savings Plan ("RRSP")
This is in reply to your letter of October 4, 1990 in which you requested our opinion on the amount that can be contributed to an RRSP while contributing to a Registered pension plan ("RPP") under Bill C-52. As your enquiry is in respect of a completed transaction you will have to contact your local district taxation office to determine what the tax consequences are under Bill C-52 as a result of 24(1). However, we are prepared to offer the following general comments.
To implement the new deduction limits for RRSPs a pension adjustment (PA) will have to be calculated. This PA, which reflect the benefits accruing to the plan member during the year under employer-sponsored plans, is subtracted from the contribution limit to determine the maximum RRSP contribution a person can make for the following year.
The regulations under Bill C-52 are still in draft, but based on the draft regulations the following will apply. The PA is calculated as a pension credit equal to:
(9x benefit entitlement) - $1,000.
The PA and benefit entitlement will be required to be calculated by your employer. In general terms it is the additional benefit that accrues under a defined benefit provision of an RPP to the individual in respect of his/her service in the year. It does not include any accruals in respect of prior years.
As a result of the above formula each individual will be able to contribute at least $1.000 per year to an RRSP.
We trust the above comments will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate