Principal Issues: At the 2013 APFF Round Table, the CRA mentioned that a non-resident annuitant who makes a contribution to a registered retirement savings plan ("RRSP") or a registered retirement income fund ("RRIF") is required to provide a social insurance number ("SIN") to the issuer of the plan. That includes situations where the provisions of paragraphs 212(1)(l) and 212(1)(q) apply. In such a case, how does a non-resident person who is not eligible to obtain a SIN benefit from a tax-free transfer to an RRSP or a RRIF in accordance with paragraphs 212(1)(l) and 212(1)(q)?
Position: If a non-resident person does not have or cannot obtain a SIN, that person will not be allowed to make a tax-free transfer to an RRSP or a RRIF in accordance with paragraphs 212(1)(l) and 212(1)(q). The CRA does not intend to provide any administrative relief to non-resident persons who want to benefit from a tax-free transfer to an RRSP or a RRIF in accordance with paragraphs 212(1)(l) and 212(1)(q).
Reasons: Application of the Act, the Income Tax Regulations and consistent with our positions in previous technical interpretations.
Financial Strategies and Instruments Roundtable, October 10, 2014
2014 APFF Conference
Question 2
Transfer of an RRSP or a RRIF following a death in favor of a non-resident spouse and SIN requirement
In Question 6 of the Financial Strategies and Instruments Roundtable at the APFF Conference of October 11, 2013, the CRA specified the conditions to be satisfied so that a registered retirement savings plan ("RRSP") or registered retirement income fund ("RRIF") of a deceased taxpayer who was a non-resident of Canada could be transferred without immediate tax consequences to a surviving spouse who is also a non-resident of Canada. One of the essential requirements is for the non-resident surviving spouse to obtain a Social Insurance Number ("SIN"), in particular as a result of the conditions set out in subsections 237(1.1) and 214.1(1) of the Income Tax Regulations (the "ITR").
While a significant percentage of surviving spouses who are non- resident in Canada may hold a SIN because, for example, they are Canadian citizens or have been permanent residents of Canada (and the SIN is still valid in the latter case), more and more surviving spouses have never resided in Canada and are not Canadian citizens. Furthermore, if such surviving spouses are not eligible for government benefits from the Quebec Pension Plan, the Canada Pension Plan or the Old Age Security Pension, it would appear that Service Canada will not issue a SIN to such persons.
Question to the CRA
Can the CRA indicate what to do in such a case in order to benefit from transfer free of tax to the RRSP or RRIF of the surviving spouse who cannot obtain a SIN?
CRA response
As part of the Financial Strategies and Instruments Roundtable of October 11, 2013, we stated that a SIN is required to be held by a non-resident surviving spouse in order to proceed with the registration of an RRSP for which the non-resident spouse is the annuitant. The latter is required, pursuant to subsections 237(1.1) and 214.1(1), to provide a SIN to the issuer of the RRSP who, in the year of the transfer of the refund of premium to which paragraph 60(l) applies, must complete an information return in prescribed form in respect of amounts paid as contributions to the plan. The definition of "RRIF" in subsection 146.3 also expressly requires the holding of a SIN in connection with the registration of a RRIF.
In light of the foregoing, if a non-resident surviving spouse does not hold or cannot obtain a SIN, that person will not be permitted to make a tax-free transfer to an RRSP or a RRIF in accordance with subparagraphs 212(1)(l)(i) and (ii) and 212(1)(q)(i) and (ii).
It should be noted that the CRA does not intend to provide any administrative relief to the non-resident surviving spouse who does not hold or cannot obtain a SIN so as to effect a tax-free transfer to an RRSP or a RRIF, as described above.
Person in the Income Tax Rulings Directorate with responsibility:
Marie-Claude Routhier
(613) 957-9768
2014-053482
Response prepared in collaboration with:
Michael Hwang
(613) 954-0407
Program Officer
Specialized Products Policy Section
Policy and Communications Division
Registered Plans Directorate
Legislative Policy and Regulatory Affairs