| November 30, 1990 | |
| Philip Girvin | Rulings Directorate |
| Registered Plans Division | Financial Industries Division |
| Registration Directorate | Wayne Harding |
| 957-8953 | |
| 7-903073 |
SUBJECT: Your File: HAU 8212-2-147(2)(k) Amounts payable vs. Constructive Receipt under Paragraph 147(2)(k) of the Income Tax Act (the "Act")
This is in reply to your memorandum of October 26, 1990 concerning the above topic.
As you are aware, it has been our position that constructive receipt of an amount payable under a DPSP will occur at the time the amount first becomes payable under the terms of the plan if the beneficiary of the amount has not otherwise elected to defer receipt of the amount in accordance with the provisions of paragraph 147(2)(k) of the Act.
At your request we re-examined the basis for this position. However, in consequences of that review we must advise that in our opinion, the position is necessary and appropriate given the intent of the provision read as a whole. For your additional information 23
In considering the severity of this position we cannot agree that it is harsh nor inconsistent with the treatment afforded other plans. For example, we note that most mutual funds require weekly valuations of unit values and payouts upon request of those values within 5 working days. This is a time period considerably shorter than the 90 day window allowed to DPSPs. We would also note that DPSPs can also distribute property, including shares, in lieu of cash benefits, a provision which should mitigate any distress sales.
21(1)(b)
for DirectorFinancial Industries DivisionRulings Directorate