F. Francis (613) 957-3496
19(1)
July 10, 1989
Dear Sirs:
This is in reply to your letter of April 24, 1989, to our Registration Division wherein you requested our opinion in respect of the proposed contribution of deferred annuity policies owned by Company M to registered pension plans ("RPP").
We do not give opinions in respect of proposed transactions other than as a reply to an advance income tax ruling request. Nevertheless, we will offer the following general comments.
In our opinion, the contribution of deferred annuity policies by Company M to the RPP will result in a deemed disposition by Company M at fair market value by virtue of paragraph 69(1)(b) of the Income Tax Act (the "Act"). Company M may be entitled to a deduction under paragraph 20(1)(s) of the Act provided that the contribution is made to the RPP pursuant to a recommendation by a qualified actuary and the contribution is approved by the Minister of National Revenue on the advice of the Superintendent of Insurance.
We are unable to provide any comments in respect of the fair market value of the policies as this is a matter for valuators.
It should be noted that where an employer acquires an interest in a life insurance policy that may reasonably be considered to fund benefits to be received by an employee upon his retirement or upon substantial change in services rendered, the arrangement would be subject to the retirement compensation arrangement rules by virtue of subsection 207.6(2) of the Act.
We trust the above comments will be of assistance to you.
Yours truly,
Wayne Douglas for Director Financial Industries Division Rulings Directorate