| 19(1) | File No. 5-900921 |
| D.S. Delorey | |
| (613) 957-3495 |
June 5, 1990
19(1)
This is in reply to your undated letter concerning the amount deductible under subsection 118(3) of the Income Tax Act as a pension credit.
In particular, your concern involves a 58 year-old person receiving a disability pension under the Canada Pension Plan. She also has a registered retirement savings plan ("RRSP") and you ask if she can use the RRSP funds to generate pension income that would qualify for the pension credit deduction by
a) acquiring a life annuity, or
(b) transferring the RRSP funds to a registered retirement income fund ("RRIF").
The charts on page 30 of the 1989 Ontario General Tax Guide suggest to you that the life annuity payments would qualify but not the RRIF payments, and you ask if this is correct.
OUR COMMENTS
We presume that the "life annuity" you refer to is the one mentioned in the first paragraph of each of the charts. This life annuity is one originating out of a pension fund or plan, not out of an RRSP. As indicated in charts 2 and 3, payments out of an RRSP or an RRIF to a person who is under 65 do not qualify for the pension credit deduction unless such payments are received because of the death of the recipient's spouse.
We trust our comments are of assistance.
Yours truly,
W. Douglas for DirectorFinancial Industries DivisionRulings Directorate