| 24(1) | 5-902088 |
| D.J. Lightheart | |
| (613) 957-8961 |
19(1)
November 6, 1990
Dear Sirs:
This is in reply to your letter of August 15, 1990 regarding the amount of Registered Retirement Savings Plan ("RRSP") contributions which would be deductible under subsection 146(5) of the Income Tax Act (the "Act") by a taxpayer who is also a member of a Deferred Profit Sharing Plan ("DPSP").
In particular you request clarification as to which year is referred to in subparagraph 146(5)(a)(iii) which deals with "a person in respect of whom a contribution was made by an employer to a deferred profit sharing plan in the year". You wish to know whether "in the year" refers to the year in which a payment is made to the DPSP or to the year for which the contribution is made. The question arises due to the provisions of subsection 147(5) of the Act which permit an employer to deduct in computing the income of a taxation year the aggregate of contributions made to a DPSP during the year or within 120 days of the and of the year. You cite an example in which an employer makes a contribution to a DPSP in April of 1990 in respect of the 1989 calendar year and makes no further contribution to the DPSP in respect of the 1990 calendar year.
It is our opinion that the expression "in the year" in subparagraph 146(5)(a)(iii) of the Act refers to the relevant taxation year of the taxpayer (that is, the calendar year) to whom subsection 146(5) of the Act applies. As such, if an employer makes a contribution in 1990 to a DPSP on behalf of an employee, the employee will be allowed to contribute to an RRSP the lesser of $3,500 and 20% of the taxpayer's earned income for the year, provided that neither subparagraph 146(5)(a)(i) nor (ii) of the Act applies.
We trust the above comments will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate