4-920443/M92-1032T
P. Spice
19(1) (613) 957-8953
February 20, 1992
Dear 19(1):
Re: Income Tax Rulings Request
19(1)
We are writing in reply to the above-noted ruling request of January 27, 1992. Your request concerns the repeal of the Income Tax Act (the "Act") provision which permitted forward averaging and the amendments to the Act which affected the deduction limits for contributions to registered retirement savings plans ("RRSP"'s).
We are unable to provide an advance ruling which would overcome the effect of the legislation. Advance rulings are provided with respect to proposed transactions and are used to provide a taxpayer with the assurance that if the transaction is carried out as proposed, the Department will apply the provisions of the Act in the manner set out in the ruling. The purpose of advance rulings is to assist persons who are planning their business and personal affairs and who wish to know with certainty what the income tax consequences will be.
We can advise, however, that there will be a deduction limit for your RRSP, which is based on the previous year's earned income, in the year subsequent to your retirement. Although you are adversely affected in the first year under the new rules, you will be entitled to a deduction in the post-retirement year which was denied to you under the old rules.
We regret our reply could not be more favourable, but hope that the foregoing comments clearly explain the Department's position. If you have any further questions concerning the pension reform legislation, please do not hesitate to contact Patricia Spice at the telephone number noted above.
Yours truly,
for DirectorFinancial Industries DivisionRulings DirectorateLegislative and IntergovernmentalAffairs Branch