Income Tax Regulations

8308

Prescribed Amount for Connected Persons

(2) Where

(a) at any particular time in a calendar year after 1990,

(i) an individual becomes a member of a registered pension plan, or

(ii) lifetime retirement benefits commence to accrue to the individual under a defined benefit provision of a registered pension plan following a period in which lifetime retirement benefits did not accrue to the individual,

(b) the individual is connected at the particular time, or was connected at any time after 1989, with an employer who participates in the plan for the benefit of the individual,

(c) the individual did not have a pension adjustment for 1990 that was greater than nil, and

(d) this subsection did not apply before the particular time to prescribe an amount with respect to the individual,

an amount equal to the lesser of $11,500 and 18 per cent of the individual's earned income (within the meaning assigned by paragraph 146(1)(c) of the Act) for 1990 is prescribed with respect to the individual for the year for the purpose of the description of B in paragraphs 146(1)(g.1) and (l) and subsection 204.2(1.1) of the Act.

8500

(1) In this Part,

"active member" of a pension plan in a calendar year means a member of the plan to whom benefits accrue under a defined benefit provision of the plan in respect of all or any portion of the year or who makes contributions, or on whose behalf contributions are made, in relation to the year under a money purchase provision of the plan; (participant actif)

"average Consumer Price Index" for a calendar year means the amount that is obtained by dividing by 12 the aggregate of all amounts each of which is the Consumer Price Index for a month in the 12-month period ending on September 30 of the immediately preceding calendar year; (moyenne de l'indice des prix à la consommation)

"beneficiary" of an individual means a person who has a right, by virtue of the participation of the individual in a pension plan, to receive benefits under the plan after the death of the individual; (bénéficiaire)

"benefit provision" of a pension plan means a money purchase or defined benefit provision of the plan; (version anglaise seulement)

"bridging benefits" provided to a member under a benefit provision of a pension plan means retirement benefits payable to the member under the provision for a period ending no later than on a date determinable at the time the benefits commence to be paid; (prestation de raccordement)

"Consumer Price Index" for a month means the Consumer Price Index for the month as published by Statistics Canada under the authority of the Statistics Act; (indice des prix à la consommation)

"defined benefit limit" for a calendar year means the greater of

(a) $1,722.22, and

(b) 1/9 of the money purchase limit for the year; (plafond des prestations déterminées)

"dependant" of an individual at the time of the individual's death means a parent, grandparent, brother, sister, child or grandchild of the individual who, at that time, is both dependent on the individual for support and

(a) under 19 years of age and will not attain 19 years of age in the calendar year that includes that time,

(b) in full-time attendance at an educational institution, or

(c) dependent on the individual by reason of mental or physical infirmity; (personne à charge)

"disabled" means, in relation to an individual, suffering from a physical or mental impairment that prevents the individual from performing the duties of the employment in which the individual was engaged before the commencement of the impairment; (invalide)

"eligible period of reduced pay" of an employee with respect to an employer means a period (other than a period in which the employee is, at any time after 1990, connected with the employer or a period any part of which is a period of disability of the employee)

(a) that begins after the employee has been employed by the employer or predecessor employers to the employer for not less than 36 months,

(b) throughout which the employee renders services to the employer, and

(c) throughout which the remuneration received by the employee from the employer is less than the remuneration that it is reasonable to expect the employee would have received from the employer had the employee rendered services throughout the period on a regular basis (having regard to the services rendered by the employee to the employer before the period) and had the employee's rate of remuneration been commensurate with the employee's rate of remuneration before the period; (période admissible de salaire réduit)

"eligible period of temporary absence" of an individual with respect to an employer means a period throughout which the individual does not render services to the employer by reason of leave of absence, layoff, strike, lock-out or any other circumstance acceptable to the Minister, other than a period

(a) a part of which is a period of disability of the individual, or

(b) in which the individual is, at any time after 1990, connected with the employer; (période admissible d'absence temporaire)

"eligible survivor benefit period", in relation to a person who is a dependant of an individual at the time of the individual's death, means the period beginning on the day of death of the individual and ending on the latest of

(a) where the dependant is under 19 years of age throughout the calendar year that includes the day of death of the individual, the earlier of

(i) December 31 of the calendar year in which the dependant attains 18 years of age, and

(ii) the day of death of the dependant,

(b) where the dependant is in full-time attendance at an educational institution on the later of the day of death of the individual and December 31 of the calendar year in which the dependant attains 18 years of age, the day on which the dependant ceases to be in full-time attendance at an educational institution, and

(c) where the dependant is dependent on the individual at the time of the individual's death by reason of mental or physical infirmity, the day on which the dependant ceases to be infirm or, if there is no such day, the day of death of the dependant; (période admissible de prestations au survivant)

"existing plan" means a pension plan that was a registered pension plan on March 27, 1988 or in respect of which an application for registration was made to the Minister before March 28, 1988, and includes a pension plan that was established before March 28, 1988 pursuant to an Act of Parliament that deems member contributions to be contributions to a registered pension plan; (régime existant)

"forfeited amount" under a money purchase provision of a pension plan means an amount to which a member of the plan has ceased to have any rights, other than the portion thereof, if any, that is payable

(a) to a beneficiary of the member as a consequence of the member's death, or

(b) to a spouse or common-law partner or former spouse or common-law partner of the member as a consequence of the breakdown of their marriage or common-law partnership; (montant perdu)

"grandfathered plan" means

(a) an existing plan that, on March 27, 1988, contained a defined benefit provision, or

(b) a pension plan that was established to provide benefits under a defined benefit provision to one or more individuals in lieu of benefits to which the individuals were entitled under a defined benefit provision of another pension plan that is a grandfathered plan, whether or not benefits are also provided to other individuals; (régime exclu)

"lifetime retirement benefits" provided to a member under a benefit provision of a pension plan means retirement benefits provided to the member under the provision that, after they commence to be paid, are payable to the member until the member's death, unless the benefits are commuted or payment of the benefits is suspended; (prestation viagère)

"multi-employer plan" in a calendar year means

(a) a pension plan in respect of which it is reasonable to expect, at the beginning of the year (or at the time in the year when the plan is established, if later), that at no time in the year will more than 95 per cent of the active members of the plan be employed by a single participating employer or by a related group of participating employers, other than a plan where it is reasonable to consider that one of the main reasons there is more than one employer participating in the plan is to obtain the benefit of any of the provisions of the Act or these Regulations that are applicable only in respect of multi-employer plans, or

(b) a pension plan that is, in the year, a specified multi-employer plan,

and, for the purposes of this definition, 2 corporations that are related to each other solely by reason that they are both controlled by Her Majesty in right of Canada or a province shall be deemed not to be related persons; (régime interentreprises)

"pensionable service" of a member of a pension plan under a defined benefit provision of the plan means the periods in respect of which lifetime retirement benefits are provided to the member under the provision; (services validables)

"period of disability" of an individual means a period throughout which the individual is disabled; (période d'invalidité)

"predecessor employer" means, in relation to a particular employer, an employer (in this definition referred to as the "vendor") who has sold, assigned or otherwise disposed of all or part of the vendor's business or undertaking or all or part of the assets of the vendor's business or undertaking to the particular employer or to another employer who, at any time after the sale, assignment or other disposition, becomes a predecessor employer in relation to the particular employer, where one or more employees of the vendor have, in conjunction with the sale, assignment or disposition, become employees of the employer acquiring the business, undertaking or assets; (employeur remplacé)

"public pension benefits" means amounts that are payable on a periodic basis under the Canada Pension Plan, a provincial pension plan as defined in section 3 of the Canada Pension Plan, or Part I of the Old Age Security Act, but does not include disability, death or survivor benefits provided under those Acts; (prestation de pension de l'État)

"public safety occupation" means the occupation of

(a) firefighter,

(b) police officer,

(c) corrections officer,

(d) air traffic controller, or

(e) commercial airline pilot; (profession liée à la sécurité publique)

"retirement benefits" provided to an individual under a benefit provision of a pension plan means benefits provided to the individual under the provision that are payable on a periodic basis; (prestation de retraite)

"surplus" under a money purchase provision of a pension plan at any time means such portion, if any, of the amount held at that time in respect of the provision as has not been allocated to members and is not reasonably attributable to

(a) forfeited amounts under the provision or earnings of the plan that are reasonably attributable to those amounts,

(b) contributions made under the provision by an employer that will be allocated to members as part of the regular allocation of such contributions, or

(c) earnings of the plan (other than earnings that are reasonably attributable to the surplus under the provision before that time) that will be allocated to members as part of the regular allocation of such earnings; (surplus)

"totally and permanently disabled" means, in relation to an individual, suffering from a physical or mental impairment that prevents the individual from engaging in any employment for which the individual is reasonably suited by virtue of the individual's education, training or experience and that can reasonably be expected to last for the remainder of the individual's lifetime; (invalidité totale et permanente)

"Year's Maximum Pensionable Earnings" for a calendar year has the meaning assigned by section 18 of the Canada Pension Plan. (maximum des gains annuels ouvrant droit à pension)

(2) All words and expressions used in this Part that are defined in subsection 147.1(1) of the Act have the meanings assigned in that subsection.

(3) For the purposes of this Part, a person is connected with an employer at any time where, at that time, the person

(a) owns, directly or indirectly, not less than 10 per cent of the issued shares of any class of the capital stock of the employer or of any other corporation that is related to the employer,

(b) does not deal at arm's length with the employer, or

(c) is a specified shareholder of the employer by reason of paragraph (d) of the definition "specified shareholder" in subsection 248(1) of the Act,

and, for the purposes of this subsection,

(d) a person shall be deemed to own, at any time, each share of the capital stock of a corporation owned, at that time, by a person with whom the person does not deal at arm's length,

(e) where shares of the capital stock of a corporation are owned at any time by a trust,

(i) if the share of any beneficiary in the income or capital of the trust depends on the exercise by any person of, or the failure by any person to exercise, any discretionary power, each beneficiary of the trust shall be deemed to own, at that time, all the shares owned by the trust, and

(ii) in any other case, each beneficiary of a trust shall be deemed to own, at that time, that proportion of the shares owned by the trust that the fair market value at that time of the beneficiary's beneficial interest in the trust is of the fair market value at that time of all beneficial interests in the trust,

(f) each member of a partnership shall be deemed to own, at any time, that proportion of all shares of the capital stock of a corporation that are property of the partnership at that time that the fair market value at that time of the member's interest in the partnership is of the fair market value at that time of the interests of all members in the partnership, and

(g) a person who, at any time, has a right under a contract, in equity or otherwise, either immediately or in the future and either absolutely or contingently, to, or to acquire, shares of the capital stock of a corporation shall be deemed to own, at that time, those shares if one of the main reasons for the existence of the right may reasonably be considered to be that the person not be connected with an employer.

(4) For the purposes of this Part, an officer who receives remuneration for holding an office shall, for any period that the officer holds the office, be deemed to render services to, and to be in the service of, the person from whom the officer receives the remuneration.

(5) For the purposes of this Part, a spouse of a particular individual includes another individual of the opposite sex who is a party to a void or voidable marriage with the particular individual.

(6) Where this Part provides that an amount is to be determined by aggregating the durations of periods that satisfy specified conditions, a period shall be included in determining the aggregate only if it is not part of a longer period that satisfies the conditions.

(7) For the purposes of the definition "active member" in subsection (1), subparagraph 8503(3)(a)(v) and paragraphs 8504(7)(d) and 8507(3)(a), such portion of an amount allocated to an individual at any time under a money purchase provision of a registered pension plan as is attributable to

(a) forfeited amounts under the provision or earnings of the plan that are reasonably attributable to those amounts,

(b) a surplus under the provision, or

(c) property transferred to the provision in respect of the actuarial surplus under a defined benefit provision of the plan or another registered pension plan

shall be deemed to be a contribution made under the provision on behalf of the individual at that time.

(8) Where an individual who is entitled to receive benefits (in this subsection referred to as "member benefits") under a pension plan because of the individual's membership in the plan is also entitled to receive other benefits (in this subsection referred to as "non-member benefits") under the plan or under any other pension plan solely because of the participation of another individual in the plan or in the other plan, the following rules apply:

(a) for the purpose of determining whether the member benefits are permissible under this Part, the non-member benefits shall be disregarded;

(b) for the purpose of determining whether the non-member benefits are permissible under this Part, the member benefits shall be disregarded; and

(c) for the purpose of determining a pension adjustment, pension adjustment reversal or provisional past service pension adjustment of the individual under Part LXXXIII, the non-member benefits shall be disregarded. SOR/92-51, s. 7; SOR/94-686, ss. 76(F), 78(F), 79(F); SOR/95-64, s. 8; SOR/99-9, s. 19; SOR/2001-67, s. 5; SOR/2001-188, s. 8.

8502

(f) - Assignment of Rights

The plan includes a stipulation that no right of a person under the plan is capable of being assigned, charged, anticipated, given as security or surrendered, and, for the purposes of this condition,

(i)    assignment does not include

(A)    assignment pursuant to a decree, order or judgment of a competent tribunal or a written agreement in settlement of rights arising as a consequence of the breakdown of a marriage or other conjugal relationship between an individual and the individual's spouse or former spouse, or

(B)    assignment by the legal representative of a deceased individual on the individual's estate, and

(ii)    surrender does not include a reduction in benefits to avoid the revocation of the registration of the plan;

8503 - Defined Benefit Provisions

(3)      Conditions Applicable to Benefits

           For the purposes of subsection 8501(2) and subparagraph 8502(c)(i), the following conditions are applicable with respect to the benefits provided under each defined benefit provision of a pension plan:

(a)       Eligible Service

            the only lifetime retirement benefits provided under the provision to a member (other than additional lifetime retirment benefits provided to a member because the member is totally and permanently disabled at the time the member's retirement benefits commence to be paid) are lifetime benefits provided in respect of one or more of the following periods:

(i)         a period throughout which the member is employed in Canada by, and receives remuneration from, an employer who participates in the plan,

(ii)        a period throughout which the member was employed in Canada by, and received remuneration from, a predecessor employer to an employer who participates in the plan,

(iii)       an eligible period of temporary absence of the member with respect to an employer who participates in the plan or a predecessor employer to such employer,

(iv)       a period of the member subsequent to a period described in subparagraph (i) where, throughout such part of the period of disability as is after 1990, the member is not connected with any employer who participates in the plan,

(v)       a period of which

(A)      benefits attributable to employment of a member with a former employer accrued to the member under a defined benefit provision of another registered pension plan, or

(B)       contributions were made by or on behalf of the member under a money purchase provision of another registered pension plan,

where the member has ceased to be a member of that other plan,

(vi)       a period throughout which the member was employed in Canada by a former employer where the period was an eligibility period for the participation of the member in another registered pension plan, and

(vii) a period acceptable to the Minister throughout which the member is employed outside Canada.

8514 - Prohibited Investments

(1)      For the purpose of subparagraph 8502(h)(i) and subject to subsections (2) and (3), a prohibited investment with respect to a registered pension plan is a share of the capital stock of, an interest in, or a debt of

(a)    an employer who participates in the plan,

(b)    a person connected with an employer who participates in the plan,

(c)    a member of the plan,

(d)    a person or partnership that controls, directly or indirectly in any manner whatever, a person or partnership referred to in paragraph (a) or (b), or

(e)    a person or partnership that does not deal at arm's length with a person or partnership a person or partnership referred to in paragraph (a), (b), (c) or (d),

or an interest in, or a right to acquire, such a share, interest or debt.

(2)      A prohibited investment does not include

(a)    a bond, debenture, note, mortgage, hypothec or similar obligation described in clause 212(1)(b)(ii)(C) of the Act;

(b)    a share listed on a stock exchange referred to in section 3200 or 3201;

(c)    a bond, debenture, note, or similar obligation of a corporation any shares of which are listed on a stock exchange referred to in section 3200 or 3201;

(d)    an interest in, or a right to acquire, property referred to in paragraph (b) or (c); or

(e)    a mortgage in respect of real property situated in Canada that

(i)    where this condition has not been waived by the Minister and the amount paid for the mortgage together with the amount of any indebtedness outstanding at the time the mortgage was acquired under any mortgage or hypothec ranking equally with or superior to the mortgage exceeds 75% of the fair market value, at that time, of a real property subject to the mortgage, is insured under the National Housing Act or by a corporation offering its services to the public in Canada as an insurer of mortgages,

(ii)    where the registered pension plan in connection with which the mortgage is held would be a designated plan for the purposes of subsection 8515(5) if subsection 8514(4) were read without reference to paragraph (b) thereof, is administered by an approved lender under the National Housing Act, and

(iii)    bears a rate of interest that would be reasonable in the circumstances if the mortgagor dealt with the mortgagee at arm's length.

(3)      A prohibited investment with respect to a registered pension plan does not include an investment acquired by the plan before March 28, 1988.

(4)      For the purposes of subsection (3), where at any time after March 27, 1988, the principal amount of a bond, debenture, note, mortgage, hypothec or similar obligation increases as a consequence of the advancement or lending of additional amounts or the maturity date of such an obligation is extended, the obligation shall, after that time, be deemed to have been issued at that time.