Revenu Canada Taxation Head Office
Peter K. Noack (613)957-8963
June 16, 1987
Dear Sirs:
We reply to your letter of May 12 concerning the interpretation of paragraphs 146(8.7)(d) and 146.3(5.5)(c) of the Income Tax Act.
You understand the interpretation to be that where a payment is received in full or partial commutation of a registered retirement savings plan or a registered retirement income fund, and a deduction is made in respect thereof under paragraph 60(1), then subsection 146(8.3) or 146.3(5.1), as the case may be, can never apply provided that where the 60(1) deduction relates to the acquisition of a non-commutable annuity, the annuity is not commuted within three years of its acquisition.
We agree. In accordance with the exception in paragraph 146(8.7)(d), subsection 146(8.3) does not apply where the annuitant under a spousal RRSP or RRIF receives a commutation payment therefrom and in respect of which the annuitant claims a deduction under paragraph 60(1), the exception will apply only if the annuity cannot be commuted in whole or in part within three years of its purchase. The wording of the exception to the application of subsection 146.3(5.1) in paragraph 146.3(5.5)(c) is identical to that in paragraph 146(8.7)(d).
Yours truly,
for Director Financial Industries Division Rulings Directorate Legislative and Intergovernmental Affairs Branch