| November 29, 1990 | |
| Registered Plans Division | Financial Industries |
| S. Kotlar, Director | Division |
| D.S. Delorey | |
| Paul Major | 957-3494 |
| 7-902945 |
SUBJECT: 24(1) Segregated Fund/Annuity Contracts Registered Retirement Income Fund ("RRIF")
This is in reply to your Round Trip Memorandum of October 17, 1990 concerning the above-referenced subject matter.
More particularly, your memorandum relates to the fact that subsection 138.1(7) of the Income Tax Act (the "Act") does not include a reference to a RRIF and that a deferred annuity, does not represent a qualified investment for a RRIF. In their letter you 24(1) has written to the Department of Finance suggesting that those exclusions are unintentional and asking that subsection 138.1(7) of the Act be amended to refer to a RRIF and that either paragraph 146.3(1)(d) of the Act or section 4900 of the Regulations be amended to include a deferred annuity as a qualified investment for a RRIF. 24(1) thus asks the Department to confirm that administrative relief will be provided so that
(a) a deferred annuity may be held by a RRIF, and
(b) income and capital gains relating to a segregated fund policy registered as a RRIF will not be taxed on a current basis.
The fact that someone has written to Finance hardly seems to be a basis in and of itself for granting the type of relief sought by if indeed such relief can be granted. In any event, the responsibility for granting such relief rests with the Assessing and Enquiries Directorate and we therefore suggest that you obtain their views before replying to the taxpayer. About all that this Directorate can confirm is that under present legislation a deferred annuity does not represent a qualified investment for a RRIF and income and capital gains relating to a segregated fund policy registered as a RRIF will be taxed currently. From our perspective, the taxpayer's goals can be accomplished only through amendments to the law, a responsibility of the Department of Finance. We presume that in its reply to the 24(1) Finance will indicate whether or not it intends to recommend such amendments.
DirectorFinancial Industries DivisionRulings Directorate