Income Tax Act

Marginal note:RPP annuity contract

• 147.4 (1) Where

  • (a) at any time an individual acquires, in full or partial satisfaction of the individual’s entitlement to benefits under a registered pension plan, an interest in an annuity contract (other than an advanced life deferred annuity) purchased from a licensed annuities provider,

  • (b) the rights provided for under the contract are not materially different from those provided for under the plan as registered,

  • (c) the contract does not permit premiums to be paid at or after that time, other than

    • (i) a premium paid at that time out of or under the plan to purchase the contract, or

    • (ii) a premium paid after that time to acquire additional benefits consequential to proceedings commenced under the Bankruptcy and Insolvency Act or the Companies’ Creditors Arrangement Act,

  • (d) either the plan is not a plan in respect of which the Minister may, under subsection 147.1(11), give a notice of intent to revoke the registration of the plan or the Minister waives the application of this paragraph with respect to the contract and so notifies the administrator of the plan in writing, and

  • (e) the individual does not acquire the interest as a consequence of a transfer of property from the plan to a registered retirement savings plan or a registered retirement income fund,

  the following rules apply for the purposes of this Act:

  • (f) the individual is deemed not to have received an amount out of or under the registered pension plan as a consequence of acquiring the interest, and

  • (g) other than for the purposes of sections 147.1 and 147.3, any amount received at or after that time by any individual under the contract is deemed to have been received under the registered pension plan.

• Marginal note:Amended contract

  (2) Where

  • (a) an amendment is made at any time to an annuity contract to which subsection (1) or paragraph 254(a) applies, other than an amendment the sole effect of which is to

    • (i) defer annuity commencement to no later than the end of the calendar year in which the individual in respect of whom the contract was purchased attains 71 years of age, or

    • (ii) enhance benefits under the annuity contract in connection with the demutualization (as defined by subsection 139.1(1)) of an insurance corporation that is considered for the purpose of section 139.1 to have been a party to the annuity contract, and

  • (b) the rights provided for under the contract are materially altered as a consequence of the amendment,

  the following rules apply for the purposes of this Act:

  • (c) each individual who has an interest in the contract immediately before that time is deemed to have received at that time the payment of an amount under a pension plan equal to the fair market value of the interest immediately before that time,

  • (d) the contract as amended is deemed to be a separate annuity contract issued at that time otherwise than pursuant to or under a superannuation or pension fund or plan, and

  • (e) each individual who has an interest in the separate annuity contract immediately after that time is deemed to have acquired the interest at that time at a cost equal to the fair market value of the interest immediately after that time.

• Marginal note:New contract

  (3) For the purposes of this Act, where an annuity contract (in this subsection referred to as the “original contract”) to which subsection 147.4(1) or paragraph 254(a) applies is, at any time, substituted by another contract,

  • (a) if the rights provided for under the other contract

    • (i) are not materially different from those provided for under the original contract, or

    • (ii) are materially different from those provided for under the original contract only because of an enhancement of benefits that can reasonably be considered to have been provided solely in connection with the demutualization (as defined by subsection 139.1(1)) of an insurance corporation that is considered for the purposes of section 139.1 to have been a party to the original contract,

    the other contract is deemed to be the same contract as, and a continuation of, the original contract; and

  • (b) in any other case, each individual who has an interest in the original contract immediately before that time is deemed to have received at that time the payment of an amount under a pension plan equal to the fair market value of the interest immediately before that time.

• Marginal note:Application of subsection (5)

  (4) Subsection (5) applies to an amount transferred from an annuity contract described in subsection (1) if

  • (a) the conditions set out in paragraphs (1)(a) to (e) were satisfied when the annuitant acquired an interest in the annuity contract; and

  • (b) the transfer is made as a consequence of

    • (i) an individual who is a spouse or common-law partner or former spouse or common-law partner of the annuitant becoming entitled to an interest in the annuity contract under a decree, order or judgment of a competent tribunal, or under a written agreement, relating to a division of property between the annuitant and the individual, in settlement of rights arising out of, or on a breakdown of, their marriage or common-law partnership, or

    • (ii) a provision of the Pension Benefits Standards Act, 1985 or a similar law of a province that permits the annuitant to commute all or part of their interest in the annuity contract.

• Marginal note:Treatment of amount transferred

  (5) Despite paragraph (1)(g), if this subsection applies to an amount transferred from an annuity contract described in subsection (1), the amount transferred is deemed for the purposes of section 147.3

  • (a) not to be transferred from the annuity contract; and

  • (b) to be transferred from the registered pension plan described in subsection (1) to fully or partially satisfy the individual’s entitlement to benefits under the benefit provision (as defined in subsection 8500(1) of the Income Tax Regulations) under which the individual’s entitlement to benefits was satisfied by the acquisition of the interest in the annuity contract.