16 October 1989 Income Tax Severed Letter AC58590 - Pension Benefit Rollover to a Spousal RRSP

5-8590
               19(1)                         D.S.Delorey
                                             613-957-3490

October 16, 1989

Dear Sirs:

This is in reply to your letter of August 14, 1989 concerning the proposed $6,000 pension benefit rollover to a spousal registered retirement savings plan (RRSP).

You attached to your letter the following excerpt from "Preparing Your Income Tax Return - 1988 CCH":

         "It is the Department's view that where a taxpayer has
         died during the year, his executors or legal
         representatives may make an RRSP contribution for the
         year to a spousal RRSP subject to the usual constraints
         as to amount based on income earned from January 1 to
         date of death and provided that the contribution is made
         within 60 days of date of death".

You ask if the above-quoted comments will apply to allow a deduction in respect of the proposed $6,000 pension benefit rollover to a spousal RRSP.

The above-quoted comments reflects a practice of the Department that is set out in paragraph 4 of Interpretation Bulletin IT-307R2 . The position relates to the provisions of subsection 146(5.1) of the Income Tax Act (the "Act"). The relevant proposal announced by the Department of Finance in 1988 (and reiterated in a Department of Finance Bulletin Release dated April 27, 1989) proposes that, for the taxation years 1989 through 1994, up to a maximum of $6,000 of periodic payments received out of a registered pension plan or a deferred profit sharing plan will be transferable tax-free to a spousal RRSP. It is not known at this time exactly what form any legislation enacted to achieve this goal will take. However, should it take a form that is comparable to that of subsection 146(5.1) of the Act, we would expect that the position set out in paragraph 4 of the IT-307R2 would apply to the proposed $6,000 rollover. Eligible periodic pension payments for the year of death would be those required to be included in the deceased taxpayer's income for the period from January 1 to the date of death.

Queries relating to the form that proposed legislation will take should be addressed to the Department of Finance.

We trust that the above comments will be of assistance.

Yours truly, for Director Financial Industries Division Rulings Directorate