2014-0543091E5 UK Personal Pension - RRSP

Principal Issues: Can an amount received from a UK personal pension scheme that is self-funded be transferred to an RRSP under 60(j) of the Act?

Position: No.

Reasons: Amounts received from a self-funded UK PPS will not be superannuation or pension benefits paid from a foreign pension plan and therefore not eligible for a tax-deferred transfer under 60(j) of the Act.

Author: Allen, Gary
Section: 60(j), 248(1), 56(1)(a)(i)

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                                                                                                                                                                        2014-054309
                                                                                                                                                                        G. Allen
September 24, 2014

Dear XXXXXXXXXX:

Re:  Foreign Pension - RRSP Transfer

This is in reply to your email sent to us on August 14, 2014 concerning the possibility of transferring the funds in your personal pension scheme (PPS) in the United Kingdom to a registered retirement savings plan (RRSP).  You explain in your letter that your UK PPS is a self-funded retirement plan that is similar to an RRSP.

This technical interpretation provides general comments about the provisions of the Income Tax Act (the “Act”) and related legislation (where referenced).  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination.  The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R6, Advance Income Tax Rulings.

Subparagraph 60(j)(i) of the Act permits, where certain conditions are satisfied, a tax deferred transfer of a superannuation or pension benefit from a foreign pension plan to an RRSP.  Paragraph 26 of IT-528, Transfers of Funds Between Registered Plans, available at: http://www.cra-arc.gc.ca/E/pub/tp/it528/it528-e.html#P212_32409, explains the conditions that must be satisfied.  Subsection 248(1) defines a “superannuation or pension benefit” to include an amount paid out of a superannuation or pension plan.  The Act does not define the terms superannuation or pension plan.  However, as expressed in various letters issued by our Directorate (e.g., documents 2012-0468271E5, 2012-0439641E5) and supported by court decisions, the general position of the CRA  is that a plan will, in general, be considered to be a superannuation or pension plan where contributions have been made to the plan by or on behalf of an employer of an employee in consideration for services rendered by the employee and the contributions are used to provide the employee with an annuity or a pension on or after the employee's retirement.  Accordingly, where only you have contributed to your UK PPS, any payments received from your UK PPS would not be considered superannuation or pension benefits and therefore a transfer of funds on a tax deferred basis from your UK PPS to an RRSP, under subparagraph 60(j)(i) of the Act, would not be permitted. 

In general, subparagraph 60(j)(ii) of the Act permits a tax deferred transfer of an amount from a foreign retirement arrangement to an RRSP.  A "foreign retirement arrangement" is defined in subsection 248(1) of the Act as a plan or arrangement prescribed by section 6803 of the Income Tax Regulations (the “Regulations”).  Currently, only Individual Retirement Accounts (IRAs) that are subject to subsections 408(a), (b) or (h) of the United States' Internal Revenue Code have been prescribed under section 6803 of the Regulations.  Consequently, amounts received out of a UK PPS are not considered amounts received from a foreign retirement arrangement.

We trust that our comments will be of assistance. 

Lita Krantz, CPA, CA
for Director
Deferred Income Plans Section II
Financial Industries and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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