M. Shea-DesRosiers 613) 957-3498
December 14, 1988
Dear Sirs: Re: 1988 Contributions to a Registered Pension Plan ("R.P.P.") Registered in 1989
This is in reply to your letter of November 8, 1988 concerning the above mentioned subject.
Where a pension plan that recognizes an employee's 1988 service is registered in 1989, the employer's contribution made in 1989 to the plan in respect of the 1988 service would only be deductible pursuant to paragraph 20(1)(s) of the Income Tax Act (the Act) and only to the extent that it was recommended by an actuarial report approved by the Minister of National Revenue.
It is our opinion that, since there was no registered pension plan in 1988 and the expression in subsection 146(5)(a) of the Act "in the year" refers to the relevant taxation year of the taxpayer (that is the calendar year) to whom subsection 146(5) of the Act applies, the employee could contribute up to the lesser of of $7,500 and 20% of his earned income for 1988 to an R.R.S.P. notwithstanding that the employer makes a contribution to an R.P.P. in 1989 in respect of the employee's 1988 service.
We trust the above comments will be of assistance to you.
Yours truly,
for Director Financial Industries Division Rulings Directorate