May 11, 1988
B. Fioravanti (613) 957-8962 Dear XXXX
Your letter of March 30, concerning past service contributions carried forward to the year of death has been referred to this Division for reply.
In general, past service contributions made in respect of years when a person was not a contributor under a plan are, to the extent they were not deductible under paragraph 60(j) of the Income Tax Act (the "Act") in the preceding year, deductible under subparagraph 8(1)(m)(ii) of the Act to a maximum of $3,500 per year. This deduction is in addition to any claim for current service contributions that may be made under subparagraph 8(1)(m)(i) or paragraph 8(1)(m.1) of the Act.
Any contributions not deducted in the year in which they are paid may be carried forward as provided in subsection 8(8) of the Act. However, clause 8(1)(m)(iii)(B) of the Act limits the maximum total deduction that an individual may make over any number of years under subparagraph 8(1)(m)(ii) to $3,500 multiplied by the number of calendar years during which the individual did not contribute to the plan.
Where a taxpayer died in 1987 with a balance carried forward from 1986 by virtue of subsection 8(8) of the Act, a deduction for that year may be claimed on the deceased's final income tax return for 1987. However, any unclaimed contributions remaining after that time would expire.
We trust that this will be of assistance.
Yours truly,
for Director Financial Industries Division Rulings Directorate