| August 16, 1989 | |
| Taxpayer Assistance Section | Financial Industries Division |
| Norm O'Donnell | Wayne C. Harding |
| Chief | 957-3499 |
| 400 Cumberland, Rm 8000 | |
| File No. 7-4115 |
Subject: September SOS Question Reference 146(5) Your file HAV 4000-8
This is in reply to your memorandum of July 10, 1989 wherein you requested our views and comments on the above-noted proposed SOS Question and Answer.
In discussions (Ouellette/Harding) you advised that the question was developed on the basis of terms of the 24(1) We therefore requested the Registration Division to provide us further details of that Plan.
Registration replied that:
1
2 24(1)
3
We also understand that this use of pension surplus has only been granted on a case by case basis where the employer has agreed to follow certain administrative practices.
We concur with your position that an employee's contributions to an RRSP will, in this case, be subject to the provisions of paragraph 146(5)(a) of the Income Tax Act (the "Act") such that they will be limited to the lesser of $3500 and 20% of the employee's earned income, minus all amounts contributed under paragraph 8(1)(m) of the Act. If the above-noted procedures are followed the allowable RRSP contribution room will be reduced by the amount of the surplus used to fund the employee's pension contributions. 21(1)(a)
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