| 19(1) | File No. 5-8635 |
| Maureen Shea-DesRosierss | |
| (613) 957-8953 |
October 18, 1989
Dear Sirs:
Re: Collapse of a Spousal Registered Retirement Savings Plan - Subsection 146(8.3) of the Income Tax Act
This is in reply to your letter of August 29, 1989 concerning the above-mentioned subject.
You describe a situation in which a taxpayer (Mr. X) has established two spousal Registered Retirement Savings Plans ("RRSP") (Plan "A" and Plan "B") under which his wife (Mrs. X) is the annuitant and to which Mr. X made contributions in Year 1 of $7,500 to Plan "A" and in Year 2 of $7,500 to Plan "B". In Year 4, Mrs. X collapses Plan "A". You ask whether the withdrawal is taxable in Mr. X's hands under subsection 146(8.3) of the Income Tax Act (the "Act").
Subsection 146(8.3) of the Act applies where funds are withdrawn in a particular taxation year from an RRSP and a deduction is made under subsection 146(5.1) of the Act for premiums paid to an RRSP in that taxation year or in one of the two immediately preceding taxation years.
The fact that there are two spousal plans, separate and distinct does not alter the application of subsection 146(8.3) of the Act. This subsection considers the contributions to any spousal plan rather than to a specific spousal plan as you suggest in your letter. So long as the wife is the annuitant to a spousal plan to which her husband has made a deductible contribution under subsection 146(5.1) of the Act, the deregistration or the collapse of any spousal plan in the wife's name will bring into the husband's income the contributions he made under subsection 146(5.1) of the Act to all spousal plans in that year or in one of the two immediately preceding taxation years.
We trust the above comments will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate