Income Tax Regulations (C.R.C., c. 945)

Past Service Benefits — Additional Rules

Replacement of Defined Benefits

• 8304 (1) Where

  • (a) an individual ceased, at any time in a calendar year, to have any rights to benefits under a defined benefit provision of a registered pension plan (in this subsection referred to as the “former provision”),

  • (b) benefits became provided at that time to the individual under another defined benefit provision of a registered pension plan (in this subsection referred to as the “current provision”) in lieu of the benefits under the former provision,

  • (c) the benefits that became provided at that time to the individual under the current provision in respect of the period in the year before that time are attributable to employment with the same employers as were the individual’s benefits in respect of that period under the former provision,

  • (d) no amount was transferred in the year on behalf of the individual from the former provision to a registered retirement savings plan, a registered retirement income fund or a money purchase provision of a registered pension plan, and

  • (e) no benefits became provided under the former provision to the individual in the year and after that time,

  each pension credit of the individual under the former provision for the year is nil.

Replacement of Money Purchase Benefits

• (2) Where

  • (a) an individual ceased, at any time in a calendar year, to have any rights to benefits under a money purchase provision of a registered pension plan or under a deferred profit sharing plan (in this subsection referred to as the “former provision”),

  • (b) benefits became provided at that time to the individual under a defined benefit provision of a registered pension plan (in this subsection referred to as the “current provision”) in lieu of benefits under the former provision,

  • (c) the benefits that became provided at that time to the individual under the current provision in respect of the period in the year before that time are attributable to employment with the same employers who made contributions under the former provision in respect of that period on behalf of the individual,

  • (d) no amount was transferred in the year on behalf of the individual from the former provision to a registered retirement savings plan, a registered retirement income fund, a money purchase provision of a registered pension plan or a deferred profit sharing plan,

  • (e) no contributions were made under the former provision by or on behalf of the individual, and no other amounts were allocated under the former provision to the individual, in the year and after that time, and

  • (f) it is reasonable to consider that no excess would, if this subsection did not apply and if the year ended at that time, be determined under any of paragraphs 147(5.1)(a) to (c), 147.1(8)(a) and (b) and (9)(a) and (b) of the Act with respect to the individual for the year,

  the following rules apply:

  • (g) each pension credit of the individual under the former provision for the year is nil, and

  • (h) the amount, if any, of the individual’s qualifying transfers made in connection with the replacement of the individual’s benefits shall be determined under subsection 8303(6) without regard to the portion, if any, of amounts transferred from the former provision to the current provision that can reasonably be considered to relate to an amount that, but for paragraph (g), would have been included in determining the individual’s pension credit under the former provision for the year.

Past Service Benefits in Year of Past Service Event

• (3) Subject to subsection (4), where, as a consequence of a past service event that occurs at a particular time in a calendar year, benefits (in this subsection and subsection (4) referred to as “past service benefits”) become provided to an individual under a defined benefit provision of a registered pension plan in respect of a period in the year and before the particular time that, immediately before the past service event, was not pensionable service of the individual under the provision, the following rules apply, except to the extent that the Minister has waived in writing their application in respect of the plan:

  • (a) each pension credit of the individual under the provision for the year shall be determined as if the past service benefits had not become provided to the individual;

  • (b) where the year is 1990, the past service event shall be deemed, for the purposes of this Part, to have occurred immediately after the end of the year;

  • (c) where the year is after 1990, each provisional PSPA of the individual that is associated with the past service event as a consequence of which the past service benefits became provided shall be determined as if the past service event had occurred immediately after the end of the year;

  • (d) where information that is required for the computation of a provisional PSPA referred to in paragraph (c) is not determinable until after the time the provisional PSPA is computed, reasonable assumptions shall be made in respect of such information; and

  • (e) subsection 147.1(10) of the Act shall apply in respect of the past service benefits to the extent that that subsection would apply if the past service event had occurred immediately after the end of the year.

Exceptions

• (4) Subsection (3) does not apply where

  • (a) the past service benefits become provided in circumstances where subsection (1) or (2) is applicable; or

  • (b) the period in respect of which the past service benefits are provided was not, at any time before the past service event,

    • (i) pensionable service of the individual under a defined benefit provision of a registered pension plan, or

    • (ii) a period in respect of which a contribution was made on behalf of, or an amount (other than an amount in respect of earnings of a plan) was allocated to, the individual under a money purchase provision of a registered pension plan or under a deferred profit sharing plan.

  • (c) [Repealed, SOR/99-9, s. 7]

Modified PSPA Calculation

• (5) Subject to subsection (10), if

  • (a) lifetime retirement benefits have, as a consequence of a past service event, become provided to an individual under a defined benefit provision of a registered pension plan in respect of one or more qualifying past service periods in relation to the individual and the past service event, and

  • (b) the benefits are considered to be attributable to employment of the individual with a single employer,

  the provisional PSPA of the individual with respect to the employer that is associated with the past service event is the amount determined by the formula

  A + B + C - D

  where

  A

  is the provisional PSPA that would be determined if

  • (a) this subsection did not apply,

  • (b) all former benefits in relation to the individual and the past service event had ceased to be provided at the time the past service event occurred,

  • (c) all former benefits in relation to the individual and the past service event were considered to be attributable to employment of the individual with the employer, and

  • (d) the value of C in subsection 8303(3) were nil;

  B

  is the total of all amounts each of which is a non-vested PA amount in respect of the individual and the past service event;

  C

  is the total of all amounts each of which is a money purchase transfer in relation to the individual and the past service event; and

  D

  is the amount of the individual’s qualifying transfers made in connection with the past service event.

Definitions for Subsection (5)

• (5.1) For the purpose of subsection (5), where

  • (a) lifetime retirement benefits (in this subsection referred to as “past service benefits”) have, as a consequence of a past service event occurring at a particular time, become provided to an individual under a defined benefit provision of a registered pension plan in respect of a period that

    • (i) immediately before the particular time, was not pensionable service of the individual under the provision, and

    • (ii) is, or was, pensionable service of the individual under another defined benefit provision (in this subsection referred to as the “former provision”) of a registered pension plan,

  • (b) either

    • (i) the individual has not, at any time after 1996 and before the particular time, been a member in relation to the former provision,

    • (ii) the individual ceased, at the particular time, to be a member in relation to the former provision, or

    • (iii) the past service event is a certifiable past service event and the individual is to cease being a member in relation to the former provision no later than 90 days after the day on which a certification of the Minister is issued for the purposes of subsection 147.1(10) of the Act in respect of the past service benefits, and

  • (c) lifetime retirement benefits to which the individual is or was entitled under the former provision in respect of the period have not been taken into account under subsection (5) as former benefits in determining a provisional PSPA of the individual that is associated with any other past service event,

  the following rules apply:

  • (d) the period is a qualifying past service period in relation to the individual and the past service event,

  • (e) lifetime retirement benefits to which the individual is or was entitled under the former provision in respect of the period are former benefits in relation to the individual and the past service event,

  • (f) where subsection 8301(8) has applied in respect of the determination of a pension credit of the individual under the former provision with respect to an employer for a year that includes any part of the period, the amount determined by the formula

    A - B

    is a non-vested PA amount in respect of the individual and the past service event, where

    A

    is the amount that would have been the individual’s pension credit under the former provision for the year with respect to the employer if subsection 8301(8) had not applied, and

    B

    is the individual’s pension credit under the former provision for the year with respect to the employer, and

  • (g) the amount determined by the formula

    A - B

    is a money purchase transfer in relation to the individual and the past service event, where

    A

    is the total of all amounts each of which is

    • (i) an amount that was transferred, at or before the particular time, on behalf of the individual from the former provision to a registered retirement savings plan, a registered retirement income fund, a money purchase provision of a registered pension plan or a defined benefit provision of a registered pension plan that was, at the time of the transfer, a specified multi-employer plan, or

    • (ii) an amount that is to be paid or otherwise made available under the former provision with respect to the individual after the particular time, other than an amount that is to be transferred to fund the past service benefits or paid directly to the individual,

    to the extent that the amount can reasonably be considered to be attributable to benefits in respect of the portion of the period that is after 1989, and

    B

    is the total of all amounts each of which is, in respect of an employer with respect to which a provisional PSPA of the individual that is associated with the past service event is determined under subsection (5), the amount, if any, by which

    • (i) the portion of the value determined for B in subsection 8303(3), for the purpose of determining the individual’s provisional PSPA with respect to the employer, that can reasonably be considered to be attributable to benefits provided in respect of the period

    exceeds

    • (ii) the portion of the value determined for A in subsection 8303(3), for the purpose of determining the individual’s provisional PSPA with respect to the employer, that can reasonably be considered to be attributable to benefits provided in respect of the period.

Reinstatement of Pre-1997 Benefits

• (6) Where lifetime retirement benefits have, as a consequence of a past service event, become provided to an individual under a defined benefit provision of a registered pension plan in respect of a period that

  • (a) was previously pensionable service of the individual under the provision,

  • (b) ceased to be pensionable service of the individual under the provision as a consequence of the individual ceasing before 1997 to be a member in relation to the provision, and

  • (c) has not, at any time after 1996 and before the past service event, been pensionable service of the individual under a defined benefit provision of a registered pension plan,

  each provisional PSPA of the individual that is associated with the past service event shall be determined as if all benefits provided to the individual under the provision before 1997 in respect of the period had been provided to the individual under another defined benefit provision of a registered pension plan in relation to which the individual has not, at any time after 1996, been a member.

Two or More Employers

• (7) Where

  • (a) lifetime retirement benefits (in this subsection referred to as “past service benefits”) provided to an individual under a defined benefit provision of a registered pension plan as a consequence of a past service event are attributable to employment of the individual with two or more employers (each of which is, in this subsection, referred to as a “current employer”), and

  • (b) subsection (5) would, but for paragraph (5)(b), apply in respect of the determination of each provisional PSPA of the individual that is associated with the past service event,

  each such provisional PSPA shall be determined in accordance with the formula set out in subsection (5), except that

  • (c) in determining the amount A,

    • (i) the former benefits of the individual shall be considered to be attributable to employment of the individual with the individual’s current employers, and

    • (ii) the portion of the former benefits attributable to employment with each current employer shall be determined by the administrator of the pension plan under which the past service benefits are provided in a manner that is consistent with the association of the past service benefits with each current employer,

  • (d) the amounts B and C shall be included in computing only one provisional PSPA of the individual, as determined by the administrator of the pension plan under which the past service benefits are provided, and

  • (e) the amount D that is deducted in computing the individual’s provisional PSPA with respect to a particular employer shall equal such portion of the individual’s qualifying transfers made in connection with the past service event as is not deducted in computing the provisional PSPA of the individual with respect to any other employer.

• (8) [Repealed, SOR/99-9, s. 7]

Specified Multi-employer Plans

• (9) Except in subparagraph (4)(b)(i), a reference in this section to a defined benefit provision of a registered pension plan at any time does not, unless expressly provided, include a defined benefit provision of a plan that is, at that time, a specified multi-employer plan.

Individual Pension Plans

• (10) If there is a past service event in relation to a defined benefit provision under an individual pension plan, the provisional PSPA of an individual with respect to an employer that is associated with the past service event is the amount, if any, determined by the formula

  A – B

  where

  A

  is the greater of

  • (a) the provisional PSPA that would be determined if

    • (i) this subsection did not apply,

    • (ii) the value of C in subsection 8303(3) were nil, and

    • (iii) the value of D in subsection 8304(5) were nil, and

  • (b) the lesser of

    • (i) the total of

      • (A) the proportion of the fair market value of all property held in connection with the individual’s designated savings arrangements at the time of the past service event, that

        • (I) the total of all amounts each of which is the duration (measured in years, including any fraction of a year) of a period that is pensionable service of the individual under the provision

        is of

        • (II) the lesser of 35 and the number of years by which the individual’s age in whole years at the time of the past service event exceeds 18, and

      • (B) the individual’s unused RRSP deduction room at the end of the year immediately preceding the calendar year that includes the past service event, and

    • (ii) the actuarial liabilities of the retirement benefits associated with the past service event, determined on the basis of the funding assumptions specified under subsections 8515(6) and (7), at the same effective date as the actuarial valuation that forms the basis for the recommendation referred to in subsection 147.2(2) of the Act that is not earlier than the calendar year of the past service event; and

  B

  is the amount of the individual’s qualifying transfers made in connection with the past service event.

• (11) Subsection (10) does not apply to a past service event in relation to an individual pension plan if the provisional PSPA of the member determined under subsections 8303(3) and 8304(5) would be nil if no qualifying transfers were made in connection with the past service event, unless it is a past service event that results from the establishment of the plan or from an amendment to the plan to provide additional retirement benefits.