5-911465
Dear Sirs:
24(1)
This is in response to your letter of May 13, 1991 regarding payment by a credit union of a patronage rebate based on deposits in registered retirement savings plans (RRSPs). The accompanying request for an advance Income tax ruling is being handled separately.
If a credit union member has a RRSP with the credit union and a patronage rebate based on the RRS balance is paid directly to the member, then there is either a benefit from an RRSP pursuant to subsection 146(8) of the Income Tax Act (the "Act") or an advantage as defined in paragraph 146(2)(c.4). The applicable provision of the Act would be determined by the facts of each situation. If the patronage rebate related to the RRSP was paid into the RRSP, no advantage or benefit would exist.
If the aforementioned advantage was extended by the issuer to the annuitants, 146(13.1) would most likely apply to penalize the issuer.
We trust this is satisfactory.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate