2019-0799111C6 2019 CLHIA Q3 - 3rd party RRSP contributions

Principal Issues: Can a Financial Institution accept a contribution to an annuitant’s RRSP from a third party who is not the annuitant’s spouse?

Position: Yes, provided that the payment is made at the direction or with the concurrence of the annuitant of the RRSP.

Reasons: Payment would be considered to be premium paid to the RRSP by the annuitant.

Author: Doiron, Wayne
Section: 146(1) "retirement savings plan", 204(1.2), 146(5), 146(5.1)

CLHIA Roundtable - May 2019

Question 3 – Third Party RRSP contributions

Contribution rules relating to RRSPs are well understood. But there appears to be some ambiguity in those rules when compared to those that apply to more recently introduced deferred income arrangements, such as Tax Free Savings Accounts.

A.    Can a Financial Institution accept a contribution to an annuitant’s RRSP from a third party who is not the annuitant’s spouse - i.e. drawn on a bank account that does not belong to the annuitant?

B.    If yes, should the Financial Institution issue the receipt to the annuitant or the third party?

C.    Does the answer to the above questions depend on the relationship between the annuitant and the third party?

D.    Does the answer to question A change if the Financial Institution collects a representation from the annuitant that the amount being contributed by the third party is a gift to them or otherwise constitutes funds belonging to the annuitant?

CRA Response

A.    Yes. Provided that the payment is made at the direction or with the concurrence of the annuitant of the RRSP, we would generally treat it as a premium paid to the RRSP by the annuitant for the purposes of the various deduction provisions in the Act for RRSP contributions. If the payment was considered a gift to the RRSP, it would not be deductible but would be included in the calculation of Part X.1 tax on excess contributions.

B.    The contribution receipt should be issued to the annuitant, not the third party. However, no receipt should be issued where the payment is considered a gift to the RRSP.

C.    No.

D.    The RRSP issuer should have sufficient evidence to determine the appropriate income tax treatment of the payment.

W. Doiron
2019-079911
May 14, 2019

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