A.B. Adler (613) 957-8962
24(1)
Attention: 19(1)
May 1, 1990
Dear Sirs:
This is in reply to your letter dated April 19, 1990 in which you requested our views concerning the application of subsection 146(5) of the Income Tax Act ("Act") to the following factual situation.
24(1)
We generally do not provide written opinions with respect to actual and completed transaction; however, we are prepared to provide you with the following general comments.
In our view the main criterion to be considered in determining whether existing paragraph 146(5)(a) of the Act applies to a specific situation in a year is whether the employer has or may at some future time contribute to a pension plan on behalf of an employee in respect of the year. Where an employment has terminated during a year and no vesting of benefits has occurred under a pension plan generally paragraph 146(5)(b) of the Act would apply to the employee. This would not be the case, of course, where the employee commenced another employment and became a member of another pension plan during that year. Also, for your information subclause 13(24)(a) of Bill C-52 proposes to amend subsection 146(5) of the Act, in its application to the 1987 to 1990 taxation years. The relevant explanatory note indicates in part that this provision is "amended to clarify that the $3,500 ceiling for RRSP contributions in a year applies for each year in which a taxpayer becomes entitled to benefits under a pension plan in respect of employment in the year, even though the taxpayer's employer may not have to make contributions to the plan in respect of the year." Any questions on the proposed legislation, prior to its enactment, should be addressed to the Department of Finance.
We trust that our comments will be of assistance to you.
Yours truly,
W. Douglas for Director Financial Industries Division Rulings Directorate