Global

Details

  • Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 2/28/2013

Canada - RRSP election for transitional relief due 1 March  

February 28: Taxpayers have until 1 March 2013 to file an election to have transitional relief apply to advantages earned on prohibited investments held in a registered retirement savings plan (RRSP) on 23 March 2011.

Action steps

Taxpayers making the election must file Form RC341, Election on Transitional Prohibited Investment Benefit for RRSPs or RRIFs, by 1 March 2013 to qualify for transitional relief from the 100% advantage tax on their "transitional prohibited investment benefit" this year and in the future.


To be eligible for the relief a taxpayer must withdraw the transitional prohibited investment benefit from their RRSP/RRIF by 90 days after the end of the year in which the income or gains are earned or realized.

 

The withdrawal amount will then be treated as a regular RRSP/RRIF withdrawal and will be included in the taxpayer's regular income to be taxed at the taxpayer's own marginal tax rate for the relevant year.

KPMG observation

Even if a taxpayer does not currently have an advantage on a prohibited investment that was held in an RRSP/RRIF as of 23 March 2011, it may be prudent for taxpayers to make an election on or before 1 March 2013, because there is currently no ability to late-file the election.


Read a February 2013 report prepared by the KPMG member firm in Canada: Time Sensitive Reminder - File Your RRSP Election for Transitional Relief by March 1




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