R. Nanner (613) 957-8960
October 21, 1986
Dear Sirs:
Re: Transfers to Registered Retirement Savings Plan ("R.R.S.P.")
This is in response to your letter dated September 11, 1986 wherein you asked the following-questions:
1. Can an individual who is between the ages of 65 and 71 years and receives Canada Pension Plan ("C.P.P.") and Old Age Security ("O.A.S.") benefits as well as an annuity income purchased with a matured R.R.S.P. transfer these receipts to an R.R.S.P.?
2. Should the annuity income not be eligible for the transfer in (1), does it qualify as "earned income" for purposes of computing the annual contribution limit?
Comments
With respect to question number one, we are of the opinion that all three types of receipts qualify for transfer to other R.R.S.P.'s, albeit under different sections of the Income Tax Act (the "Act").
C.P.P. and O.A.S. benefits may be transferred to the R.R.S.P.'s pursuant to paragraph 60(j) of the Act.
Annuity income derived from a matured R.R.S.P. may be transferred to other R.R.S.P.'s under the provisions of subsection 146(16) of the Act.
One notable difference between a paragraph 60(j) transfer and a subsection 146(16) transfer is that a transfer under the latter has to be a direct transfer between the plans whereas paragraph 60(j) transfers do not have to be direct transfers. The amounts transferred pursuant to subsection 146(16) of the Act are not included in the calculation of the taxpayer's income.
In answer to your second question we are of the opinion that provided the annuity income has not been transferred to another R.R.S.P. pursuant to subsection 146(16) of the Act, it qualifies as "earned income" as defined in paragraph 146(1)(c) of the Act.
We hope these comments are of assistance to you.
Yours truly,
André Dulude
for Director Financial Industries Division Rulings Directorate Legislative and Intergovernmental Affairs Branch