| 24(1) | 5-902504 |
| N. Goldstein | |
| (613) 952-9853 |
19(1)
November 26, 1990
Dear Sirs:
This is in reply to your letter of September 14, 1990, concerning our client's assessment in which he was denied a deduction for certain contributions which he made to a spousal Registered Retirement Savings Plan ("RRSP"). Your client subsequently transferred the funds in the spousal RRSP to a Registered Retirement Income Fund ("RRIF") and now proposes to withdraw, from the RRIF, the excess contributions to the spousal RRSP.
As noted in Information Circular 70-6R2, we do not give opinions in respect of specific proposed transactions other than as a reply to an advance income tax ruling request, nor do we give opinions where an assessment has already been issued. The effects of an assessment should by discussed with your client's local District Office. We do, however, offer the following general comments.
Subsection 146(8.2) of the Income Tax Act (the "Act"), with respect to premiums paid into an RRSP prior to 1991, permits a deduction from income if an excess contribution has been made to a RRSP or a spousal RRSP and the excess contribution is withdrawn from the (spousal) RRSP or if monies were transferred from a (spousal) RRSP to a RRIF and the excess contribution is withdrawn from the RRIF. The withdrawal from the (spousal) RRSP or the RRIF must be made in the year in which the premiums are paid, the year in which the taxation year is assessed or the year which immediately follows either of these years. The prescribed form T746 is used to determine the deductible amount under subsection 146(8.2).
As a consequence of an excess contribution, a taxpayer may be required to pay tax under Part X.1 of the act. This tax is calculated pursuant to subsections 204.1(1) and 204.2(2) of the Act and, generally, equals 1% per month of the excess amount as determined by subsection 204.2(1) of the Act for the period of time such excess amount remains in the RRSP or RRIF. Prescribed form T1-OVP must be completed to determine the amount of tax payable under Part X.1.
We trust the foregoing is of assistance.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate