Revenue Canada Taxation Head Office
XXX
F. Francis (613)957-3498
December 1, 1987
Dear Sirs:
This is in reply to your letter of September 29, 1987 to the Winnipeg District Taxation office wherein you requested our views with respect to a Deferred Salary Retirement Plan (the "Plan").
In our letter dated July 24, 1987, we advised you that the Plan would be considered a "salary deferral arrangement" as that term is defined in subsection 248(1) of the Income Tax Act (the "Act"). As a consequence thereof, deferred amounts for services rendered after June 1986 would be included in the member's income in the year of deferral as a benefit under paragraph 6(1)(a) of the Act by virtue of subsection 6(11) of the Act.
Pursuant to our telephone conversation on November 25, 1987 (XXXX Francis) you advised us that the XXXX proposes to wind-up the Plan and pay out the amounts accumulated therein to the members. Furthermore, you requested our views with respect to the tax consequences arising on the termination of one of the employees of the Plan.
To the extent that any cash payment received by a member is greater or lesser than the amounts previously included in the member's income, the excess or shortfall, as the case may be, will be included in income pursuant to section 6 of the Act or allowed as a deduction pursuant to paragraph 8(l)(a) of the Act respectively.
Finally, you enquire as to whether payments received from the Plan could be transferred tax-free to a member's registered retirement savings plan ("RRSP"). In our view, there is no provision in the Act which would allow for a tax-free rollover to an RRSP in these circumstances.
The above comments are an expression of opinion only and are not binding on the Department. They are, however, our best opinion of the relevant legislation as it applies generally and we trust that they are of assistance to you.
Yours truly,
for Director Financial Industries Division Rulings Directorate Legislative and Intergovernmental Affairs Branch