Update to - Income Tax Folio S3-F10-C3, Advantages – RRSPs, RESPs, RRIFs, R
Updated CRA - Income Tax Folio S3-F10-C3, Advantages – RRSPs, RESPs, RRIFs, RDSPs and TFSAs
Series 3: Property, Investments and Savings Plans
Folio 10: Registered Plans for Individuals
Chapter 3: Advantages – RRSPs, RESPs, RRIFs, RDSPs and TFSAs
The table What we heard from you summarizes the comments received from the tax community during the 3-month comment period that followed the publication of this Folio Chapter and that ended on December 31, 2018 . It also reflects the action taken in respect of each comment. Any changes made to the Chapter are described in the Chapter History.
The Act imposes several investment restrictions on registered retirement savings plans (RRSPs), registered education savings plans (RESPs), registered retirement income funds (RRIFs), registered disability savings plans (RDSPs), and tax-free savings accounts (TFSAs). These registered plans may invest only in property that is a qualified investment and must not invest in property that is a prohibited investment . In addition, they must avoid investments or transactions that are structured so as to artificially shift value into or out of the plan or result in certain other supplementary advantages.
The qualified investment rules are discussed in Income Tax Folio S3-F10-C1, Qualified Investments – RRSPs, RESPs, RRIFs, RDSPs and TFSAs and the prohibited investment rules are discussed in Income Tax Folio S3-F10-C2, Prohibited Investments - RRSPs, RESPs, RRIFs, RDSPs and TFSAs.
This Chapter focuses on the advantage rules. These rules, together with the prohibited investment rules, represent overriding investment restrictions for registered plans intended to guard against abusive tax planning. This Chapter discusses the meaning of the term advantage , as well as the applicable tax consequences. The comments in this Chapter apply to all RRSPs, RESPs, RRIFs, RDSPs and TFSAs, whether in the form of a trust, deposit or insurance contract.
The CRA issues income tax folios to provide a summary of technical interpretations and positions regarding certain provisions contained in income tax law. Due to their technical nature, folios are used primarily by tax specialists and other individuals who have an interest in tax matters. While each paragraph in a chapter of a folio may relate to provisions of the law in force at the time it was written (see the Application section), the information provided is not a substitute for the law. The reader should, therefore, consider the chapter’s information in light of the relevant provisions of the law in force for the particular tax year being considered.
The CRA may have published additional guidance and detailed filing instructions on matters discussed in this Chapter and other topics that may be of interest. See the CRA Forms and publications webpage for this and other topics that may be of interest.
Table of contents
Discussion and interpretation
- Overview of advantage rules
- References to various terms
- Definition of advantage
- Tax consequences of advantages