Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Tax-free Savings Accounts

Marginal note:Definitions

• 146.2 (1) The following definitions apply in this section and in Part XI.01.

  distribution

  distribution under an arrangement of which an individual is the holder means a payment out of or under the arrangement in satisfaction of all or part of the holder’s interest in the arrangement. (distribution)

  holder

  holder of an arrangement means

  • (a) until the death of the individual who entered into the arrangement with the issuer, the individual;

  • (b) at and after the death of the individual, the individual’s survivor, if the survivor acquires

    • (i) all of the individual’s rights as the holder of the arrangement, and

    • (ii) to the extent it is not included in the rights described in subparagraph (i), the unconditional right to revoke any beneficiary designation made, or similar direction imposed, by the individual under the arrangement or relating to property held in connection with the arrangement; and

  • (c) at and after the death of a holder described in paragraph (b) or in this paragraph, the holder’s survivor, if the survivor acquires

    • (i) all of the holder’s rights as the holder of the arrangement, and

    • (ii) to the extent it is not included in the rights described in subparagraph (i), the unconditional right to revoke any beneficiary designation made, or similar direction imposed, by the holder under the arrangement or relating to property held in connection with the arrangement. (titulaire)

  issuer

  issuer of an arrangement means the person described as the issuer in the definition qualifying arrangement. (émetteur)

  qualifying arrangement

  qualifying arrangement, at a particular time, means an arrangement

  • (a) that is entered into after 2008 between a person (in this definition referred to as the “issuer”) and an individual (other than a trust) who is at least 18 years of age;

  • (b) that is

    • (i) an arrangement in trust with an issuer that is a corporation licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee,

    • (ii) an annuity contract with an issuer that is a licensed annuities provider, or

    • (iii) a deposit with an issuer that is

      • (A) a person who is, or is eligible to become, a member of the Canadian Payments Association, or

      • (B) a credit union that is a shareholder or member of a body corporate referred to as a “central” for the purposes of the Canadian Payments Act;

  • (c) that provides for contributions to be made under the arrangement to the issuer in consideration of, or to be used, invested or otherwise applied for the purpose of, the issuer making distributions under the arrangement to the holder;

  • (d) under which the issuer and the individual agree, at the time the arrangement is entered into, that the issuer will file with the Minister an election to register the arrangement as a TFSA; and

  • (e) that, at all times throughout the period that begins at the time the arrangement is entered into and that ends at the particular time, complies with the conditions in subsection (2). (arrangement admissible)

  survivor

  survivor of an individual means another individual who is, immediately before the individual’s death, a spouse or common-law partner of the individual. (survivant)

• Marginal note:Qualifying arrangement conditions

  (2) The conditions referred to in paragraph (e) of the definition qualifying arrangement in subsection (1) are as follows:

  • (a) the arrangement requires that it be maintained for the exclusive benefit of the holder (determined without regard to any right of a person to receive a payment out of or under the arrangement only on or after the death of the holder);

  • (b) the arrangement prohibits, while there is a holder of the arrangement, anyone that is neither the holder nor the issuer of the arrangement from having rights under the arrangement relating to the amount and timing of distributions and the investing of funds;

  • (c) the arrangement prohibits anyone other than the holder from making contributions under the arrangement;

  • (d) the arrangement permits distributions to be made to reduce the amount of tax otherwise payable by the holder under section 207.02 or 207.03;

  • (e) the arrangement provides that, at the direction of the holder, the issuer shall transfer all or any part of the property held in connection with the arrangement (or an amount equal to its value) to another TFSA of the holder;

  • (f) if the arrangement is an arrangement in trust, it prohibits the trust from borrowing money or other property for the purposes of the arrangement; and

  • (g) the arrangement complies with prescribed conditions.

• Marginal note:Paragraphs (2)(a), (b) and (e) not applicable

  (3) The conditions in paragraphs (2)(a), (b) and (e) do not apply to the extent that they are inconsistent with subsection (4).

• Marginal note:Using TFSA interest as security for a loan

  (4) A holder of a TFSA may use the holder’s interest or, for civil law, right in the TFSA as security for a loan or other indebtedness if

  • (a) the terms and conditions of the indebtedness are terms and conditions that persons dealing at arm’s length with each other would have entered into; and

  • (b) it can reasonably be concluded that none of the main purposes for that use is to enable a person (other than the holder) or a partnership to benefit from the exemption from tax under this Part of any amount in respect of the TFSA.

• Marginal note:Right of set-off

  (4.1) A qualifying arrangement that is a deposit may provide that the issuer has the right to set off any indebtedness owed by the holder to the issuer, or a person related to the issuer, against the holder’s interest in the arrangement if

  • (a) the terms and conditions of the indebtedness and the right of set-off are terms and conditions that persons dealing at arm’s length with each other would have entered into; and

  • (b) it is reasonable to conclude that none of the main purposes for the right of set-off is to enable a person (other than the holder) or a partnership to benefit from the exemption from tax under this Part of any amount in respect of the TFSA.

• Marginal note:TFSA

  (5) If the issuer of an arrangement that is, at the time it is entered into, a qualifying arrangement files with the Minister, before March of the calendar year following the calendar year in which the arrangement was entered into (or such later date as is acceptable to the Minister), an election in prescribed form and manner to register the arrangement as a TFSA under the Social Insurance Number of the individual with whom the arrangement was entered into, the arrangement becomes a TFSA at the time the arrangement was entered into and ceases to be a TFSA at the earliest of the following times:

  • (a) the time at which the last holder of the arrangement dies;

  • (b) the time at which the arrangement ceases to be a qualifying arrangement; or

  • (c) the earliest time at which the arrangement is not administered in accordance with the conditions in subsection (2).

• Marginal note:Trust not taxable

  (6) No tax is payable under this Part by a trust that is governed by a TFSA on its taxable income for a taxation year, except that, if at any time in the taxation year, it carries on one or more businesses or holds one or more properties that are non-qualified investments (as defined in subsection 207.01(1)) for the trust, tax is payable under this Part by the trust on the amount that would be its taxable income for the taxation year if it had no incomes or losses from sources other than those businesses and properties, and no capital gains or capital losses other than from dispositions of those properties, and for that purpose,

  • (a) “income” includes dividends described in section 83;

  • (b) the trust’s taxable capital gain or allowable capital loss from the disposition of a property is equal to its capital gain or capital loss, as the case may be, from the disposition; and

  • (c) the trust’s income shall be computed without reference to subsection 104(6).

• Marginal note:Carrying on a business

  (6.1) If tax is payable under this Part for a taxation year because of subsection (6) by a trust that is governed by a TFSA that carries on one or more businesses at any time in the taxation year,

  • (a) the holder of the TFSA is jointly and severally, or solidarily, liable with the trust to pay each amount payable under this Act by the trust that is attributable to that business or those businesses; and

  • (b) the issuer’s liability at any time for amounts payable under this Act in respect of that business or those businesses shall not exceed the total of

    • (i) the amount of property of the trust that the issuer is in possession or control of at that time in its capacity as legal representative of the trust, and

    • (ii) the total amount of all distributions of property from the trust on or after the date that the notice of assessment was sent in respect of the taxation year and before that time.

• Marginal note:Amount credited to a deposit

  (7) An amount that is credited or added to a deposit that is a TFSA as interest or other income in respect of the TFSA is deemed not to be received by the holder of the TFSA solely because of that crediting or adding.

• Marginal note:Trust ceasing to be a TFSA

  (8) If an arrangement that governs a trust ceases, at a particular time, to be a TFSA,

  • (a) the trust is deemed

    • (i) to have disposed, immediately before the particular time, of each property held by the trust for proceeds equal to the property’s fair market value immediately before the particular time, and

    • (ii) to have acquired, at the particular time, each such property at a cost equal to that fair market value;

  • (b) the trust’s last taxation year that began before the particular time is deemed to have ended immediately before the particular time; and

  • (c) a taxation year of the trust is deemed to begin at the particular time.

• Marginal note:Trust ceasing to be a TFSA on death of holder

  (9) If an arrangement that governs a trust ceases to be a TFSA because of the death of the holder of the TFSA,

  • (a) the arrangement is deemed, for the purposes of subsections (6) and (8), any regulations made under subsection (13), the definition trust in subsection 108(1), paragraph 149(1)(u.2) and the definitions qualified investment and non-qualified investment in subsection 207.01(1), to continue to be a TFSA until, and to cease to be a TFSA immediately after, the exemption-end time, being in this subsection the earlier of

    • (i) the time at which the trust ceases to exist, and

    • (ii) the end of the first calendar year that begins after the holder dies;

  • (b) there shall be included in computing a taxpayer’s income for a taxation year the total of all amounts each of which is an amount determined by the formula

    A – B

    where

    A

    is the amount of a payment made out of or under the trust, in satisfaction of all or part of the taxpayer’s beneficial interest in the trust, in the taxation year, after the holder’s death and at or before the exemption-end time, and

    B

    is an amount designated by the trust not exceeding the lesser of

    • (i) the amount of the payment, and

    • (ii) the amount by which the fair market value of all of the property held by the trust immediately before the holder’s death exceeds the total of all amounts each of which is the value of B in respect of any other payment made out of or under the trust; and

  • (c) there shall be included in computing the trust’s income for its first taxation year, if any, that begins after the exemption-end time the amount determined by the formula

    A – B

    where

    A

    is the fair market value of all of the property held by the trust at the exemption-end time, and

    B

    is the amount by which the fair market value of all of the property held by the trust immediately before the holder’s death exceeds the total of all amounts each of which is the value of B in paragraph (b) in respect of a payment made out of or under the trust.

• Marginal note:Annuity contract ceasing to be a TFSA

  (10) If an annuity contract ceases, at a particular time, to be a TFSA,

  • (a) the holder of the TFSA is deemed to have disposed of the contract immediately before the particular time for proceeds equal to its fair market value immediately before the particular time;

  • (b) the contract is deemed to be a separate annuity contract issued and effected at the particular time otherwise than pursuant to or as a TFSA; and

  • (c) each person who has an interest or, for civil law, a right in the separate annuity contract at the particular time is deemed to acquire the interest at the particular time at a cost equal to its fair market value at the particular time.

• Marginal note:Deposit ceasing to be a TFSA

  (11) If a deposit ceases, at a particular time, to be a TFSA,

  • (a) the holder of the TFSA is deemed to have disposed of the deposit immediately before the particular time for proceeds equal to its fair market value immediately before the particular time; and

  • (b) each person who has an interest or, for civil law, a right in the deposit at the particular time is deemed to acquire the interest at the particular time at a cost equal to its fair market value at the particular time.

• Marginal note:Arrangement is TFSA only

  (12) An arrangement that is a qualifying arrangement at the time it is entered into is deemed not to be a retirement savings plan, an education savings plan, a retirement income fund or a disability savings plan.

• Marginal note:Regulations

  (13) The Governor in Council may make regulations requiring issuers of TFSAs to file information returns in respect of TFSAs.

Registered Retirement Income Funds

Marginal note:Definitions

• 146.3 (1) In this section,

  annuitant

  annuitant under a retirement income fund at any time means

  • (a) the first individual to whom the carrier has undertaken to make payments described in the definition retirement income fund out of or under the fund, where the first individual is alive at that time,

  • (b) after the death of the first individual, a spouse or common-law partner (in this definition referred to as the “survivor”) of the first individual to whom the carrier has undertaken to make payments described in the definition retirement income fund out of or under the fund after the death of the first individual, if the survivor is alive at that time and the undertaking was made

    • (i) pursuant to an election that is described in that definition and that was made by the first individual, or

    • (ii) with the consent of the legal representative of the first individual, and

  • (c) after the death of the survivor, another spouse or common-law partner of the survivor to whom the carrier has undertaken, with the consent of the legal representative of the survivor, to make payments described in the definition retirement income fund out of or under the fund after the death of the survivor, where that other spouse or common-law partner is alive at that time; (rentier)

  carrier

  carrier of a retirement income fund means

  • (a) a person licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada an annuities business,

  • (b) a corporation licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee,

  • (c) a corporation approved by the Governor in Council for the purposes of section 146 that is licensed or otherwise authorized under the laws of Canada or a province to issue investment contracts, or

  • (d) a person referred to as a depositary in section 146,

  that has agreed to make payments under a retirement incomefund to the individual who is the annuitant under the fund; (émetteur)

  designated benefit

  designated benefit of an individual in respect of a registered retirement income fund means the total of

  • (a) such amounts paid out of or under the fund after the death of the last annuitant thereunder to the legal representative of that annuitant

    • (i) as would, had they been paid under the fund to the individual, have been refunds of premiums (in this paragraph having the meaning assigned by subsection 146(1)) if the fund were a registered retirement savings plan that had not matured before the death, and

    • (ii) as are designated jointly by the legal representative and the individual in prescribed form filed with the Minister, and

  • (b) amounts paid out of or under the fund after the death of the last annuitant thereunder to the individual that would be refunds of premiums had the fund been a registered retirement savings plan that had not matured before the death; (prestation désignée)

  minimum amount

  minimum amount under a retirement income fund for a year means, for the year in which the fund was entered into, a nil amount, and, for any other year, the amount determined by the formula

  (A × B) + C

  where

  A

  is the total fair market value of all properties held in connection with the fund at the beginning of the year (other than annuity contracts held by a trust governed by the fund that, at the beginning of the year, are not described in paragraph (b.1) of the definition qualified investment);

  B

  is

  • (a) where the first annuitant under the fund elected in respect of the fund under paragraph (b) of the definition minimum amount in this subsection, as it read before 1992, or under subparagraph 146.3(1)(f)(i) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, to use the age of another individual, the prescribed factor for the year in respect of the other individual,

  • (b) where paragraph (a) does not apply and the first annuitant under the fund so elects before any payment has been made under the fund by the carrier, the prescribed factor for the year in respect of an individual who was the spouse or common-law partner of the first annuitant at the time of the election, and

  • (c) in any other case, the prescribed factor for the year in respect of the first annuitant under the fund, and

  C

  is, where the fund governs a trust, the total of all amounts each of which is

  • (a) a periodic payment under an annuity contract held by the trust at the beginning of the year (other than an annuity contract described at the beginning of the year in paragraph (b.1) of the definition qualified investment) that is paid to the trust in the year, or

  • (b) if the periodic payment under such an annuity contract is not made to the trust because the trust disposed of the right to that payment in the year, a reasonable estimate of that payment on the assumption that the annuity contract had been held throughout the year and no rights under the contract were disposed of in the year; (minimum)

  property held

  property held in connection with a retirement income fund means property held by the carrier of the fund, whether held by the carrier as trustee or beneficial owner thereof, the value of which, or the income or loss from which, is relevant in determining the amount for a year payable to the annuitant under the fund; (biens détenus)

  qualified investment

  qualified investment for a trust governed by a registered retirement income fund means

  • (a) an investment that would be described by any of paragraphs (a) to (d), (f) and (g) of the definition qualified investment in section 204 if the reference in that definition to “a trust governed by a deferred profit sharing plan or revoked plan” were read as a reference to “a trust governed by a registered retirement income fund” and if that definition were read without reference to the words “with the exception of excluded property in relation to the trust”,

  • (b) [Repealed, 2007, c. 29, s. 19]

  • (b.1) a contract for an annuity issued by a licensed annuities provider where

    • (i) the trust is the only person who, disregarding any subsequent transfer of the contract by the trust, is or may become entitled to any annuity payments under the contract, and

    • (ii) the holder of the contract has a right to surrender the contract at any time for an amount that would, if reasonable sales and administration charges were ignored, approximate the value of funds that could otherwise be applied to fund future periodic payments under the contract,

  • (b.2) a contract for an annuity issued by a licensed annuities provider where

    • (i) annual or more frequent periodic payments are or may be made under the contract to the holder of the contract,

    • (ii) the trust is the only person who, disregarding any subsequent transfer of the contract by the trust, is or may become entitled to any annuity payments under the contract,

    • (iii) neither the time nor the amount of any payment under the contract may vary because of the length of any life, other than

      • (A) if the annuitant under the fund (in this paragraph referred to as the “RRIF annuitant”) has made the election referred to in the definition retirement income fund in respect of the fund and a spouse or common-law partner, the life of the RRIF annuitant or the life of the spouse or common-law partner, and

      • (B) in any other case, the life of the RRIF annuitant,

    • (iv) the day on which the periodic payments began or are to begin (in this paragraph referred to as the “start date”) is not later than the end of the year following the year in which the contract was acquired by the trust,

    • (v) either

      • (A) the periodic payments are payable for the life of the RRIF annuitant or the joint lives of the RRIF annuitant and the RRIF annuitant’s spouse or common-law partner and either there is no guaranteed period under the contract or there is a guaranteed period that begins at the start date and does not exceed a term equal to 90 years minus the lesser of

        • (I) the age in whole years at the start date of the RRIF annuitant (determined on the assumption that the RRIF annuitant is alive at the start date), and

        • (II) the age in whole years at the start date of a spouse or common-law partner of the RRIF annuitant (determined on the assumption that a spouse or common-law partner of the RRIF annuitant at the time the contract was acquired is a spouse or common-law partner of the RRIF annuitant at the start date), or

      • (B) the periodic payments are payable for a term equal to

        • (I) 90 years minus the age described in subclause (I), or

        • (II) 90 years minus the age described in subclause (II), and

    • (vi) the periodic payments

      • (A) are equal, or

      • (B) are not equal solely because of one or more adjustments that would, if the contract were an annuity under a retirement savings plan, be in accordance with subparagraphs 146(3)(b)(iii) to 146(3)(b)(v) or that arise because of a uniform reduction in the entitlement to the periodic payments as a consequence of a partial surrender of rights to the periodic payments, and

  • (c) such other investments as may be prescribed by regulations of the Governor in Council made on the recommendation of the Minister of Finance; (placement admissible)

  registered retirement income fund

  registered retirement income fund means a retirement income fund accepted by the Minister for registration for the purposes of this Act and registered under the Social Insurance Number of the first annuitant under the fund; (fonds enregistré de revenu de retraite)

  retirement income fund

  retirement income fund means an arrangement between a carrier and an annuitant under which, in consideration for the transfer to the carrier of property, the carrier undertakes to pay amounts to the annuitant (and, where the annuitant so elects, to the annuitant’s spouse or common-law partner after the annuitant’s death), the total of which is, in each year in which the minimum amount under the arrangement for the year is greater than nil, not less than the minimum amount under the arrangement for that year, but the amount of any such payment does not exceed the value of the property held in connection with the arrangement immediately before the time of the payment. (fonds de revenu de retraite)

• Marginal note:Adjusted minimum amount for 2008

  (1.1) The minimum amount under a retirement income fund for 2008 is 75 per cent of the amount that would, in the absence of this subsection, be the minimum amount under the fund for the year.

• Marginal note:Exceptions

  (1.2) Subsection (1.1) does not apply to a retirement income fund

  • (a) for the purposes of subsections (5.1) and 153(1) and the definition periodic pension payment in section 5 of the Income Tax Conventions Interpretation Act; nor

  • (b) if the individual who was the annuitant under the fund on January 1, 2008 attained 70 years of age in 2007.

• Marginal note:Exceptions

  (1.3) For the purposes of subsections (5.1) and 153(1) and the definition periodic pension payment in section 5 of the Income Tax Conventions Interpretation Act, the minimum amount under a retirement income fund for 2015 is the amount that would be the minimum amount under the fund for the year if it were determined using the prescribed factors under subsection 7308(3) or (4), as the case may be, of the Income Tax Regulations as they read on December 31, 2014.

• Marginal note:Adjusted minimum amount for 2020

  (1.4) The minimum amount under a retirement income fund for 2020 is 75% of the amount that would, in the absence of this subsection, be the minimum amount under the fund for the year.

• Marginal note:Exceptions

  (1.5) Subsection (1.4) does not apply to a retirement income fund for the purposes of subsections (5.1) and 153(1) and the definition periodic pension payment in section 5 of the Income Tax Conventions Interpretation Act.

• Marginal note:Acceptance of fund for registration

  (2) The Minister shall not accept for registration for the purposes of this Act any retirement income fund of an individual unless, in the Minister’s opinion, the following conditions are complied with:

  • (a) the fund provides that the carrier shall make only those payments described in any of paragraphs (d) and (e), the definition retirement income fund in subsection (1), and subsections (14) and (14.1);

  • (b) the fund provides that payments thereunder may not be assigned in whole or in part;

  • (c) if the carrier is a person referred to as a depositary in section 146, the fund provides that

    • (i) the carrier has no right of offset as regards the property held in connection with the fund in respect of any debt or obligation owing to the carrier, and

    • (ii) the property held in connection with the fund cannot be pledged, assigned or in any way alienated as security for a loan or for any purpose other than that of the making by the carrier to the annuitant those payments described in paragraph 146.3(2)(a);

  • (d) the fund provides that, except where the annuitant’s spouse or common-law partner becomes the annuitant under the fund, the carrier shall, as a consequence of the death of the annuitant, distribute the property held in connection with the fund at the time of the annuitant’s death or an amount equal to the value of such property at that time;

  • (e) the fund provides that, at the direction of the annuitant, the carrier shall transfer all or part of the property held in connection with the fund, or an amount equal to its value at the time of the direction (other than property required to be retained in accordance with the provision described in paragraph 146.3(2)(e.1) or 146.3(2)(e.2)), together with all information necessary for the continuance of the fund, to a person who has agreed to be a carrier of another registered retirement income fund of the annuitant;

  • (e.1) where the fund does not govern a trust or the fund governs a trust created before 1998 that does not hold an annuity contract as a qualified investment for the trust, the fund provides that if an annuitant, at any time, directs that the carrier transfer all or part of the property held in connection with the fund, or an amount equal to its value at that time, to another registered retirement income fund of the annuitant or in accordance with subsection (14.1), the transferor shall retain an amount equal to the lesser of

    • (i) the fair market value of such portion of the property as would, if the fair market value thereof does not decline after the transfer, be sufficient to ensure that the minimum amount under the fund for the year in which the transfer is made may be paid to the annuitant in the year, and

    • (ii) the fair market value of all the property;

  • (e.2) where paragraph (e.1) does not apply, the fund provides that if an annuitant, at any time, directs that the carrier transfer all or part of the property held in connection with the fund, or an amount equal to its value at that time, to another registered retirement income fund of the annuitant or in accordance with subsection (14.1), the transferor shall retain property in the fund sufficient to ensure that the total of

    • (i) all amounts each of which is the fair market value, immediately after the transfer, of a property held in connection with the fund that is

      • (A) property other than an annuity contract, or

      • (B) an annuity contract described, immediately after the transfer, in paragraph (b.1) of the definition qualified investment in subsection 146.3(1), and

    • (ii) all amounts each of which is a reasonable estimate, as of the time of the transfer, of the amount of an annual or more frequent periodic payment under an annuity contract (other than an annuity contract described in clause 146.3(2)(e.2)(i)(B)) that the trust may receive after the transfer and in the year of the transfer

    is not less than the amount, if any, by which the minimum amount under the fund for that year exceeds the total of all amounts received out of or under the fund before the transfer that are included in computing the income of the annuitant under the fund for that year;

  • (f) the fund provides that the carrier shall not accept property as consideration thereunder other than property transferred from

    • (i) a registered retirement savings plan under which the individual is the annuitant,

    • (ii) another registered retirement income fund under which the individual is the annuitant,

    • (iii) the individual to the extent only that the amount of the consideration was an amount described in subparagraph 60(l)(v),

    • (iv) a registered retirement income fund or registered retirement savings plan of the individual’s spouse or common-law partner or former spouse or common-law partner under a decree, order or judgment of a competent tribunal, or under a written separation agreement, relating to a division of property between the individual and the individual’s spouse or common-law partner or former spouse or common-law partner in settlement of rights arising out of, or on the breakdown of, their marriage or common-law partnership,

    • (iv.1) a deferred profit sharing plan in accordance with subsection 147(19);

    • (v) a registered pension plan of which the individual is a member (within the meaning assigned by subsection 147.1(1)),

    • (vi) a registered pension plan in accordance with subsection 147.3(5) or (7),

    • (vii) a specified pension plan in circumstances to which subsection 146(21) applies,

    • (viii) a pooled registered pension plan in accordance with subsection 147.5(21),

    • (ix) an advanced life deferred annuity under which the individual is the annuitant, if the transfer is a refund described under paragraph (g) of the definition advanced life deferred annuity in subsection 146.5(1), or

    • (x) a FHSA in accordance with subsection 146.6(7);

  • (g) [Repealed, 2011, c. 24, s. 49]

  • (h) the fund in all other respects complies with regulations of the Governor in Council made on the recommendation of the Minister of Finance.

• Marginal note:No tax while trust governed by fund

  (3) Except as provided in subsection 146.3(9), no tax is payable under this Part by a trust on the taxable income of the trust for a taxation year if, throughout the period in the year during which the trust was in existence, the trust was governed by a registered retirement income fund of an individual, except that if the trust has

  • (a) borrowed money in the year or has borrowed money that it has not repaid before the commencement of the year,

  • (b) received a gift of property (other than a transfer from a registered retirement savings plan under which the individual is the annuitant (within the meaning of subsection 146(1)) or a transfer from a registered retirement income fund under which the individual is the annuitant)

    • (i) in the year, or

    • (ii) in a preceding year and has not divested itself of the property or any property substituted therefor before the commencement of the year, or

  • (c) carried on any business or businesses in the year,

  tax is payable under this Part by the trust,

  • (d) where paragraph 146.3(3)(a) or 146.3(3)(b) applies, on its taxable income for the year, and

  • (e) where neither paragraph 146.3(3)(a) nor (b) applies and where paragraph 146.3(3)(c) applies, on the amount, if any, by which

    • (i) the amount that its taxable income for the year would be if it had no incomes or losses from sources other than from the business or businesses, as the case may be,

    exceeds

    • (ii) such portion of the amount determined under subparagraph 146.3(3)(e)(i) in respect of the trust for the year as can reasonably be considered to be income from, or from the disposition of, qualified investments for the trust.

• Marginal note:Exception

  (3.1) Notwithstanding subsection 146.3(3), if the last annuitant under a registered retirement income fund has died, tax is payable under this Part by the trust governed by the fund on its taxable income for each year after the year following the year in which the last annuitant under the fund died.

• Marginal note:Disposition or acquisition of property by trust

  (4) Where at any time in a taxation year a trust governed by a registered retirement income fund

  • (a) disposes of property for a consideration less than the fair market value of the property at the time of the disposition, or for no consideration, or

  • (b) acquires property for a consideration greater than the fair market value of the property at the time of the acquisition,

  2 times the difference between that fair market value and the consideration, if any, shall be included in computing the income for the taxation year of the taxpayer who is the annuitant under the fund at that time.

• Marginal note:Benefits taxable

  (5) There shall be included in computing the income of a taxpayer for a taxation year all amounts received by the taxpayer in the year out of or under a registered retirement income fund other than the portion thereof that can reasonably be regarded as

  • (a) part of the amount included in computing the income of another taxpayer by virtue of subsections 146.3(6) and 146.3(6.2);

  • (b) an amount received in respect of the income of the trust under the fund for a taxation year for which the trust was not exempt from tax by virtue of subsection 146.3(3.1);

  • (c) an amount that relates to interest, or to another amount included in computing income otherwise than because of this section, and that would, if the fund were a registered retirement savings plan, be a tax-paid amount (within the meaning assigned by paragraph (b) of the definition tax-paid amount in subsection 146(1)); or

  • (d) an amount in respect of which the annuitant pays a tax under Part XI.01, unless the tax is waived, cancelled or refunded.

• Marginal note:Amount included in income

  (5.1) If at any time in a taxation year a particular amount in respect of a registered retirement income fund that is a spousal or common-law partner plan (within the meaning assigned by subsection 146(1)) in relation to a taxpayer is required to be included in the income of the taxpayer’s spouse or common-law partner and the taxpayer is not living separate and apart from the taxpayer’s spouse or common-law partner at that time by reason of the breakdown of their marriage or common-law partnership, there shall be included at that time in computing the taxpayer’s income for the year an amount equal to the least of

  • (a) the total of all amounts each of which is a premium (within the meaning assigned by subsection 146(1)) paid by the taxpayer in the year or in one of the two immediately preceding taxation years to a registered retirement savings plan under which the taxpayer’s spouse or common-law partner was the annuitant (within the meaning assigned by subsection 146(1)) at the time the premium was paid,

  • (b) the particular amount, and

  • (c) the amount, if any, by which

    • (i) the total of all amounts each of which is an amount in respect of the fund that is required, in the year and at or before that time, to be included in the income of the taxpayer’s spouse or common-law partner

    exceeds

    • (ii) the minimum amount under the fund for the year.

• Marginal note:Ordering

  (5.3) Where a taxpayer has paid more than one premium described in subsection 146.3(5.1), such a premium or part thereof paid by the taxpayer at any time shall be deemed to have been included in computing the taxpayer’s income by virtue of that subsection before premiums or parts thereof paid by the taxpayer after that time.

• Marginal note:Spouse’s income

  (5.4) Where, in respect of an amount required at any time in a taxation year to be included in computing the income of a taxpayer’s spouse, all or part of a premium has, by reason of subsection 146.3(5.1), been included in computing the taxpayer’s income for the year, the following rules apply:

  • (a) the premium or part thereof, as the case may be, shall, for the purposes of subsections 146.3(5.1) and 146(8.3) after that time, be deemed not to have been a premium paid to a registered retirement savings plan under which the taxpayer’s spouse was the annuitant (within the meaning assigned by subsection 146(1)); and

  • (b) an amount equal to the premium or part thereof, as the case may be, may be deducted in computing the income of the spouse for the year.

• Marginal note:Where s. (5.1) does not apply

  (5.5) Subsection 146.3(5.1) does not apply

  • (a) in respect of a taxpayer at any time during the year in which the taxpayer dies;

  • (b) in respect of a taxpayer where either the taxpayer or the annuitant is a non-resident at the particular time referred to in that subsection;

  • (c) to any payment that is received in full or partial commutation of a registered retirement savings plan or a registered retirement income fund and in respect of which a deduction was made under paragraph 60(l) if, where the deduction was in respect of the acquisition of an annuity, the terms of the annuity provide that it cannot be commuted, and it is not commuted, in whole or in part within 3 years after the acquisition; or

  • (d) in respect of an amount that is deemed by subsection 146.3(6) to have been received by an annuitant under a registered retirement income fund immediately before the annuitant’s death.

• Marginal note:Where last annuitant dies

  (6) Where the last annuitant under a registered retirement income fund dies, that annuitant shall be deemed to have received, immediately before death, an amount out of or under a registered retirement income fund equal to the fair market value of the property of the fund at the time of the death.

• Marginal note:Designated benefit deemed received

  (6.1) A designated benefit of an individual in respect of a registered retirement income fund that is received by the legal representative of the last annuitant under the fund shall be deemed

  • (a) to be received by the individual out of or under the fund at the time it is received by the legal representative; and

  • (b) except for the purpose of the definition designated benefit in subsection 146.3(1), not to be received out of or under the fund by any other person.

• Marginal note:Transfer of designated benefit

  (6.11) For the purpose of subparagraph 60(l)(v), the eligible amount of a particular individual for a taxation year in respect of a registered retirement income fund is nil unless the particular individual was

  • (a) a spouse or common-law partner of the last annuitant under the fund, or

  • (b) a child or grandchild of that annuitant who was dependent because of physical or mental infirmity on that annuitant,

  in which case the eligible amount shall be determined by the formula

  A × [1 - ((B - C) / D)]

  where

  A

  is the portion of the designated benefit of the particular individual in respect of the fund that is included because of subsection 146.3(5) in computing the particular individual’s income for the year,

  B

  is the minimum amount under the fund for the year,

  C

  is the lesser of

  • (a) the total amounts included because of subsection 146.3(5) in computing the income of an annuitant under the fund for the year in respect of amounts received by the annuitant out of or under the fund, and

  • (b) the minimum amount under the fund for the year, and

  D

  is the total of all amounts each of which is the portion of a designated benefit of an individual in respect of the fund that is included because of subsection 146.3(5) in computing the individual’s income for the year.

• Marginal note:Amount deductible

  (6.2) There may be deducted from the amount deemed by subsection 146.3(6) to be received by an annuitant out of or under a registered retirement income fund an amount not exceeding the amount determined by the formula

  A × [1 - ((B + C - D) / (B + C))]

  where

  A

  is the total of

  • (a) all designated benefits of individuals in respect of the fund,

  • (b) all amounts that would, if the fund were a registered retirement savings plan, be tax-paid amounts (in this subsection having the meaning assigned by subsection 146(1)) in respect of the fund received by individuals who received, otherwise than because of subsection 146.3(6.1), designated benefits in respect of the fund, and

  • (c) all amounts each of which is an amount that would, if the fund were a registered retirement savings plan, be a tax-paid amount in respect of the fund received by the legal representative of the last annuitant under the fund, to the extent that the legal representative would have been entitled to designate that tax-paid amount under paragraph (a) of the definition designated benefit in subsection 146.3(1) if tax-paid amounts were not excluded in determining refunds of premiums (as defined in subsection 146(1));

  B

  is the fair market value of the property of the fund at the particular time that is the later of

  • (a) the end of the first calendar year that begins after the death of the annuitant, and

  • (b) the time immediately after the last time that any designated benefit in respect of the fund is received by an individual;

  C

  is the total of all amounts paid out of or under the fund after the death of the last annuitant thereunder and before the particular time; and

  D

  is the lesser of

  • (a) the fair market value of the property of the fund at the time of the death of the last annuitant thereunder, and

  • (b) the sum of the values of B and C in respect of the fund.

• Marginal note:Deduction for post-death reduction in value

  (6.3) If the last annuitant under a registered retirement income fund dies, there may be deducted in computing the annuitant’s income for the taxation year in which the annuitant dies an amount not exceeding the amount determined, after all amounts payable out of or under the fund have been paid, by the formula

  A – B

  where

  A

  is the total of all amounts each of which is

  • (a) the amount deemed by subsection (6) to have been received by the annuitant out of or under the fund,

  • (b) an amount (other than an amount described in paragraph (c)) received, after the death of the annuitant, by a taxpayer out of or under the fund and included, because of subsection (5), in computing the taxpayer’s income, or

  • (c) an amount that would, if the fund were a registered retirement savings plan, be a tax-paid amount (within the meaning assigned by subsection 146(1)) in respect of the fund; and

  B

  is the total of all amounts paid out of or under the fund after the death of the annuitant.

• Marginal note:Subsection (6.3) not applicable

  (6.4) Except where the Minister has waived in writing the application of this subsection with respect to all or any portion of the amount determined in subsection (6.3) in respect of a registered retirement income fund, that subsection does not apply if

  • (a) at any time after the death of the annuitant, a trust governed by the fund held an investment that is not a qualified investment; or

  • (b) the last payment out of or under the fund was made after the end of the year following the year in which the annuitant died.

• Marginal note:Property used as security for loan

  (7) If at any time in a taxation year a trust governed by a registered retirement income fund uses or permits to be used any property of the trust as security for a loan, the fair market value of the property at the time it commenced to be so used shall be included in computing the income for the year of the taxpayer who is the annuitant under the fund at that time.

• (8) [Repealed, 2011, c. 24, s. 49]

• Marginal note:Tax payable on income from non-qualified investment

  (9) If a trust that is governed by a registered retirement income fund holds, at any time in a taxation year, a property that is not a qualified investment,

  • (a) tax is payable under this Part by the trust on the amount that its taxable income for the year would be if it had no incomes or losses from sources other than the property that is not a qualified investment or no capital gains or capital losses other than from the disposition of that property, as the case may be; and

  • (b) for the purposes of paragraph 146.3(9)(a),

    • (i) income includes dividends described in section 83, and

    • (ii) paragraphs 38(a) and (b) are to be read as if the fraction set out in each of those paragraphs were replaced by the word “all”.

• Marginal note:Recovery of property used as security

  (10) Where at any time in a taxation year a loan for which a trust governed by a registered retirement income fund has used or permitted to be used trust property as security ceases to be extant, and the fair market value of the property so used was included by virtue of subsection 146.3(7) in computing the income of a taxpayer who was the annuitant under the fund, there may be deducted in computing the income for a taxation year of the taxpayer who is at that time the annuitant, an amount equal to the amount, if any, remaining when

  • (a) the net loss (exclusive of payments by the trust as or on account of interest) sustained by the trust in consequence of its using or permitting to be used the property as security for the loan and not as a result of a change in the fair market value of the property

  is deducted from

  • (b) the amount so included in computing the income of a taxpayer in consequence of the trust’s using or permitting to be used the property as security for the loan.

• Marginal note:Change in fund after registration

  (11) Where, on any day after a retirement income fund has been accepted by the Minister for registration for the purposes of this Act, the fund is revised or amended or a new fund is substituted therefor, and the fund as revised or amended or the new fund substituted therefor, as the case may be, (in this subsection referred to as the “amended fund”) does not comply with the requirements of this section for its acceptance by the Minister for registration for the purposes of this Act, the following rules apply:

  • (a) the amended fund shall be deemed, for the purposes of this Act, not to be a registered retirement income fund; and

  • (b) the taxpayer who was the annuitant under the fund before it became an amended fund shall, in computing the taxpayer’s income for the taxation year that includes that day, include as income received out of the fund at that time an amount equal to the fair market value of all the property held in connection with the fund immediately before that time.

• Marginal note:Idem

  (12) For the purposes of subsection 146.3(11), an arrangement under which a right or obligation under a retirement income fund is released or extinguished either wholly or in part and either in exchange or substitution for any right or obligation, or otherwise (other than an arrangement the sole object and legal effect of which is to revise or amend the fund) or under which payment of any amount by way of loan or otherwise is made on the security of a right under a retirement income fund, shall be deemed to be a new fund substituted for the retirement income fund.

• (13) [Repealed, 2011, c. 24, s. 49]

• Marginal note:Transfer on breakdown of marriage or common-law partnership

  (14) An amount is transferred from a registered retirement income fund of an annuitant in accordance with this subsection if the amount

  • (a) is transferred on behalf of an individual who is a spouse or common-law partner or former spouse or common-law partner of the annuitant and who is entitled to the amount under a decree, an order or a judgment of a competent tribunal, or under a written agreement, that relates to a division of property between the annuitant and the individual in settlement of rights that arise out of, or on a breakdown of, their marriage or common-law partnership; and

  • (b) is transferred directly to

    • (i) a registered retirement income fund under which the individual is the annuitant, or

    • (ii) a registered retirement savings plan under which the individual is the annuitant (within the meaning assigned by subsection 146(1)).

• Marginal note:Transfer to PRPP or RPP

  (14.1) An amount is transferred from a registered retirement income fund of an annuitant in accordance with this subsection if the amount

  • (a) is transferred at the direction of the annuitant directly to an account of the annuitant under a pooled registered pension plan;

  • (b) is transferred at the direction of the annuitant directly to a registered pension plan of which, at any time before the transfer, the annuitant was a member (as defined in subsection 147.1(1)) or to a specified pension plan and is allocated to the annuitant under a money purchase provision (as defined in subsection 147.1(1)) of the plan; or

  • (c) is transferred at the direction of the annuitant directly to a licensed annuities provider to acquire an advanced life deferred annuity for the benefit of the annuitant.

• Marginal note:Taxation of amount transferred

  (14.2) An amount transferred on behalf of an individual in accordance with paragraph (2)(e) or subsection (14) or (14.1)

  • (a) is not, solely because of that transfer, to be included in computing the income of any taxpayer; and

  • (b) is not to be deducted in computing the income of any taxpayer.

• Marginal note:Credited or added amount deemed not received

  (15) Where

  • (a) an amount is credited or added to a deposit with a depositary referred to in paragraph (d) of the definition carrier in subsection 146.3(1) as interest or income in respect of the deposit,

  • (b) the deposit is a registered retirement income fund at the time the amount is credited or added to the deposit, and

  • (c) during the calendar year in which the amount is credited or added or during the preceding calendar year, the annuitant under the fund was alive,

  the amount shall be deemed not to be received by the annuitant or any other person solely because of the crediting or adding.