B. Fioravanti (613)957-8962
XXXX
July 29, 1988
Dear Sirs:
This is in reply to your letter of July 5, requesting our interpretation of the expression "an annuity commencing at maturity" as used in paragraph 146(1)(i.1) of the Income Tax Act (the "Act").
"Maturity" is defined in paragraph 146(1)(d) of the Income Tax Act to mean "... the date fixed under a retirement savings plan for the commencement of any retirement income ...". Subparagraph 146(2)(b)(i) of the Act states that the plan must not provide for the payment of any benefit after maturity except by way of retirement income to the annuitant. Paragraph 146(2)(b.4) requires that a plan must not provide for maturity after the end of the year in which the annuitant attains 71 years of age.
Based on the foregoing, it is our view that the first payment must be made no later than the calendar year immediately following that in which the plan matured. A deferred annuity would not, in our view, come within the meaning of "retirement income" as defined in subparagraph 146(1)(i.l)(ii) of the Act. Accordingly, at the maturity of the plan, the amount used to acquire the deferred annuity would be included in the annuitant's income as a payment out of the plan.
We trust the foregoing will be of assistance.
Yours truly,
for Director Financial Industries Division Rulings Directorate