News and Insights

Non-trusteed Insurance Contracts Excluded from New Pension Rules

Tax Development Dec 10, 2010

Finance Canada and the Canada Revenue Agency have each recently confirmed that, where a registered pension plan is funded through the medium of a contract for insurance with a life insurer that is an annuity contract or a deposit administration/segregated fund contract, this type of plan would be excluded from the deemed supply and remittance requirements where the contract is held under a non-trusteed arrangement.  In this case, there is no pension entity that is a trust, and such arrangements are not caught by the new rules in sections 172.1 and 261.01 of the Excise Tax Act.  Clients should confirm with their pension managers whether or not their pension funds are held under non-trusteed arrangements such as this.  

Finance Canada has also advised that they are looking at whether or not to extend the new registered pension plan rules to non-trusteed arrangements, although such a change will likely be only on a prospective basis, thus leaving untouched any calendar fiscal year ending December 31, 2010.