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

Regulations are current to 2017-11-20 and last amended on 2017-07-01. Previous Versions

Pension Adjustments

Pension Adjustment with Respect to Employer

  •  (1) For the purpose of subsection 248(1) of the Act, pension adjustment of an individual for a calendar year with respect to an employer means, subject to paragraphs 8308(4)(d) and (5)(c), the total of all amounts each of which is

    • (a) the individual’s pension credit for the year with respect to the employer under a deferred profit sharing plan or under a benefit provision of a registered pension plan;

    • (b) the individual’s pension credit for the year with respect to the employer under a foreign plan, determined under section 8308.1; or

    • (c) the individual’s pension credit for the year with respect to the employer under a specified retirement arrangement, determined under section 8308.3.

Pension Credit — Deferred Profit Sharing Plan

  • (2) For the purposes of subsection (1) and Part LXXXV and subsection 147(5.1) of the Act, and subject to subsection 8304(2), an individual’s pension credit for a calendar year with respect to an employer under a deferred profit sharing plan is the amount determined by the formula

    A - B

    where

    A
    is the total of all amounts each of which is
    • (a) a contribution made to the plan in the year by the employer with respect to the individual, or

    • (b) the portion of an amount allocated in the year to the individual that is attributable to forfeited amounts under the plan or to earnings of the plan in respect of forfeited amounts, except to the extent that the portion

      • (i) is included in determining the individual’s pension credit for the year with respect to any other employer who participates in the plan, or

      • (ii) is paid to the individual in the year; and

    B
    is nil, unless the conditions in subsection (2.1) are satisfied, in which case it is the total referred to in paragraph (2.1)(b).
Conditions Re — Description of B in Subsection (2)
  • (2.1) The following are conditions for the purpose of the description of B in subsection (2):

    • (a) the total of all amounts, each of which would be the individual’s pension credit for the calendar year with respect to the employer under a deferred profit sharing plan if the description of B in subsection (2) were read as “is nil”., is

      • (i) equal to, or less than, 50% of the money purchase limit for the year,

      • (ii) greater than 18% of the amount that would be the individual’s compensation from the employer for the year if the definition compensation in subsection 147.1(1) of the Act were read without reference to paragraph (b) of that definition, and

      • (iii) equal to, or less than, 18% of the amount that would be the individual’s compensation from the employer for the preceding year if the definition compensation in subsection 147.1(1) of the Act were read without reference to paragraph (b) of that definition; and

    • (b) the total of all amounts, each of which is an amount that is paid from the plan to the individual or the employer in the calendar year or in the first two months of the following year that can reasonably be considered to derive from an amount included in the value of A in subsection (2) with respect to the individual and the employer for the year, is greater than nil.

Non-vested Termination from DPSP

  • (3) For the purposes of subsection (1) and Part LXXXV and subsection 147(5.1) of the Act, where

    • (a) an individual ceased in a calendar year after 1989 and before 1997 to be employed by an employer who participated in a deferred profit sharing plan for the benefit of the individual,

    • (b) as a consequence of the termination of employment, the individual ceased in the year to have any rights to benefits (other than a right to a refund benefit) under the plan,

    • (c) the individual was not entitled to benefits under the plan at the end of the year, or was entitled only to a refund benefit, and

    • (d) no benefit has been paid under the plan with respect to the individual, other than a refund benefit,

    the individual’s pension credit under the plan for the year with respect to the employer is nil.

Pension Credit — Money Purchase Provision

  • (4) For the purposes of subsection (1) and Part LXXXV and subsection 147.1(9) of the Act, and subject to subsections (4.1) and (8) and 8304(2), an individual’s pension credit for a calendar year with respect to an employer under a money purchase provision of a registered pension plan is the total of all amounts each of which is

    • (a) a contribution (other than an additional voluntary contribution made by the individual in 1990, an excluded contribution or a contribution described in paragraph 8308(6)(e) or (g)) made under the provision in the year by

      • (i) the individual, except to the extent that the contribution was not made in connection with the individual’s employment with the employer and is included in determining the individual’s pension credit for the year with respect to any other employer who participates in the plan, or

      • (ii) the employer with respect to the individual, or

    • (b) such portion of an amount allocated in the year to the individual as is attributable to

      • (i) forfeited amounts under the provision or earnings of the plan in respect thereof,

      • (ii) a surplus under the provision,

      • (ii.1) property transferred to the provision in respect of the actuarial surplus under a defined benefit provision of the plan or another registered pension plan, or

      • (ii.2) property transferred to the provision in respect of the surplus under another money purchase provision of the plan or under a money purchase provision of another registered pension plan,

      except to the extent that that portion is

      • (iii) included in determining the individual’s pension credit for the year with respect to any other employer who participates in the plan,

      • (iv) paid to the individual in the year, or

      • (v) where the year is 1990, attributable to amounts forfeited before 1990 or earnings of the plan in respect thereof,

    except that the individual’s pension credit is nil where the year is before 1990, and, for the purposes of this subsection, the plan administrator shall determine the portion of a contribution made by an individual or an amount allocated to the individual that is to be included in determining the individual’s pension credit with respect to each employer.

Money Purchase Pension Credits Based on Amounts Allocated

  • (4.1) Where,

    • (a) under the terms of a money purchase provision of a pension plan, the method for allocating contributions is such that contributions made by an employer with respect to a particular individual may be allocated to another individual, and

    • (b) the Minister has, on the written application of the administrator of the plan, approved in writing a method for determining pension credits under the provision that, for each individual, takes into account amounts allocated to the individual,

    each pension credit under the provision is the amount determined in accordance with the method approved by the Minister.

Pension Credit — Defined Benefit Provision of a Specified Multi-employer Plan

  • (5) For the purposes of this Part and Part LXXXV and subsection 147.1(9) of the Act, an individual’s pension credit for a calendar year with respect to an employer under a defined benefit provision of a registered pension plan that is, in the year, a specified multi-employer plan is the aggregate of

    • (a) the aggregate of all amounts each of which is a contribution (other than an excluded contribution) made under the provision by the individual

      • (i) in the year, in respect of

        • (A) the year, or

        • (B) a plan year ending in the year (other than in respect of such portion of a plan year as is before 1990), or

      • (ii) in January of the year (other than in January 1990) in respect of the immediately preceding calendar year,

      except to the extent that the contribution was not made in connection with the individual’s employment with the employer and is included in determining the individual’s pension credit for the year with respect to any other employer who participates in the plan,

    • (b) the aggregate of all amounts each of which is a contribution made in the year by the employer in respect of the provision, to the extent that the contribution may reasonably be considered to be determined by reference to the number of hours worked by the individual or some other measure that is specific to the individual, and

    • (c) the amount determined by the formula

      (A / B) × (C - B)

      where

      A
      is the amount determined under paragraph (b) for the purpose of computing the individual’s pension credit,
      B
      is the aggregate of all amounts each of which is the amount determined under paragraph (b) for the purpose of computing the pension credit of an individual for the year with respect to the employer under the provision, and
      C
      is the aggregate of all amounts each of which is a contribution made in the year by the employer in respect of the provision,

      except that, where the year is before 1990, the individual’s pension credit is nil.

Pension Credit — Defined Benefit Provision

  • (6) Subject to subsections (7), (8) and (10) and sections 8304 and 8308, for the purposes of this Part and Part LXXXV and subsection 147.1(9) of the Act, an individual’s pension credit for a calendar year with respect to an employer under a defined benefit provision of a particular registered pension plan (other than a plan that is, in the year, a specified multi-employer plan) is

    • (a) if the year is after 1989, the amount determined by the formula

      A - B

      where

      A
      is 9 times the individual’s benefit entitlement under the provision with respect to the employer and the year, and
      B
      is the amount, if any, by which the PA offset for the year exceeds the total of all amounts each of which is the value of B determined under this paragraph for the purpose of computing the individual’s pension credit for the year
      • (i) with respect to the employer under any other defined benefit provision of a registered pension plan,

      • (ii) with respect to any other employer who at any time in the year does not deal at arm’s length with the employer, under a defined benefit provision of a registered pension plan, or

      • (iii) with respect to any other employer under a defined benefit provision of the particular plan; and

    • (b) if the year is before 1990, nil.

Pension Credit — Defined Benefit Provision of a Multi-employer Plan

  • (7) Where a registered pension plan is a multi-employer plan (other than a specified multi-employer plan) in a calendar year, the following rules apply, except to the extent that the Minister has waived in writing their application in respect of the plan, for the purpose of determining the pension credit of an individual for the year under a defined benefit provision of the plan:

    • (a) where the individual is employed in the year by more than one participating employer, the pension credit of the individual for the year under the provision with respect to a particular employer shall be determined as if the individual were not employed by any other participating employer;

    • (b) the description of B in paragraph (6)(a) shall be read as

      “B
      is the amount determined by the formula

      (C × D) - E

      where

      C
      is the PA offset for the year,
      D
      is
      • (i) where the member rendered services on a full-time basis throughout the year to the employer, one, and

      • (ii) in any other case, the fraction (not greater than one) that measures the services that, for the purpose of determining the member’s lifetime retirement benefits under the provision, the member is treated as having rendered in the year to the employer, expressed as a proportion of the services that would have been rendered by the member in the year to the employer if the member had rendered services to the employer on a full-time basis throughout the year, and

      E
      is the total of all amounts each of which is the value of B determined under this paragraph for the purpose of computing the individual’s pension credit for the year with respect to the employer under any other defined benefit provision of the plan; and”;
    • (c) where a period in the year is a period of reduced services of the individual, the pension credit of the individual for the year under the provision with respect to each participating employer shall be determined as the aggregate of

      • (i) the pension credit that would be determined if no benefits (other than benefits attributable to services rendered by the individual) had accrued to the individual in respect of periods of reduced services, and

      • (ii) the pension credit that would be determined if the only benefits that had accrued to the individual were benefits in respect of periods of reduced services, other than benefits attributable to services rendered by the individual during such periods; and

    • (d) subsection (10) shall not apply.

Non-vested Termination from RPP

  • (8) For the purposes of this Part and Part LXXXV and subsection 147.1(9) of the Act, and subject to subsection (9), where

    • (a) an individual ceased in a calendar year after 1989 and before 1997 to be employed by an employer who participated in a registered pension plan for the benefit of the individual,

    • (b) as a consequence of the termination of employment, the individual ceased in the year to have any rights to benefits (other than a right to a refund benefit) under a benefit provision of the plan,

    • (c) the individual was not entitled to benefits under the provision at the end of the year, or was entitled only to a refund benefit, and

    • (d) no benefit has been paid under the provision with respect to the individual, other than a refund benefit,

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

    • (e) where the provision is a money purchase provision, the total of all amounts each of which is a contribution (other than an additional voluntary contribution made by the individual in 1990, an excluded contribution or a contribution described in paragraph 8308(6)(e)) made under the provision in the year by the individual, except to the extent that the contribution was not made in connection with the individual’s employment with the employer and is included in determining the individual’s pension credit for the year with respect to any other employer who participates in the plan, and

    • (f) where the provision is a defined benefit provision, the lesser of

      • (i) the pension credit that would be determined if this subsection were not applicable, and

      • (ii) the aggregate of all amounts each of which is a contribution (other than an excluded contribution) made under the provision by the individual in, and in respect of, the year, except to the extent that the contribution was not made in connection with the individual’s employment with the employer and is included in determining the individual’s pension credit for the year with respect to any other employer who participates in the plan.

Multi-employer Plans

  • (9) Subsection (8) is not applicable in respect of a registered pension plan that is a multi-employer plan in a calendar year, except where

    • (a) the plan is not a specified multi-employer plan in the year;

    • (b) if the plan contains a defined benefit provision, the Minister has waived in writing the application of paragraph (7)(b) in respect of the plan for the year; and

    • (c) the Minister has approved in writing the application of subsection (8) in respect of the plan for the year.

Transition Rule — Money Purchase Offsets

  • (10) Where,

    • (a) throughout the period beginning on January 1, 1981 and ending on December 31 of a particular calendar year after 1989 and before 2000, there has been subtracted, in determining the amount of lifetime retirement benefits under a defined benefit provision of a registered pension plan (other than a specified multi-employer plan), the amount of lifetime retirement benefits under a money purchase provision of the plan or of another registered pension plan,

    • (b) lifetime retirement benefits under the defined benefit provision are determined, at the end of the particular year, in substantially the same manner as they were determined at the end of 1989, and

    • (c) for each individual and each calendar year before 1990, the amount of employer contributions made under the money purchase provision for the year with respect to the individual did not exceed $3,500,

    the pension credit of an individual for the particular year with respect to an employer under the defined benefit provision is equal to the amount, if any, by which

    • (d) the amount that would, but for this subsection, be the individual’s pension credit

    exceeds

    • (e) the lesser of

      • (i) $2,500, and

      • (ii) the amount determined by the formula

        1/10 × (A - (B × C))

        where

        A
        is the balance in the individual’s account under the money purchase provision at the end of 1989,
        B
        is the aggregate of all amounts each of which is the duration (measured in years, including any fraction of a year) of a period ending before 1990 that is pensionable service of the individual under the defined benefit provision and that is not part of a longer period ending before 1990 that is pensionable service of the individual under the provision, and
        C
        is the amount that would be the individual’s pension credit for 1989 with respect to the employer under the defined benefit provision if subsection (6) were read without reference to the words “if the year is after 1989” in paragraph (6)(a) and without reference to paragraph (6)(b).

Timing of Contributions

  • (11) Subject to paragraph (12)(b), for the purposes of this Part, a contribution made by an employer in the first two months of a calendar year to a deferred profit sharing plan, in respect of a money purchase provision of a registered pension plan, or in respect of a defined benefit provision of a registered pension plan that was, in the immediately preceding calendar year, a specified multi-employer plan, shall be deemed to have been made by the employer at the end of the immediately preceding calendar year and not to have been made in the year, to the extent that the contribution can reasonably be considered to relate to a preceding calendar year.

Indirect Contributions

  • (12) For the purposes of this Part and Part LXXXIV, where a trade union or association of employers (in this subsection and subsections (13) and (14) referred to as the “contributing entity”) makes contributions to a registered pension plan,

    • (a) such portion of a payment made to the contributing entity by an employer or individual as may reasonably be considered to relate to the plan (determined in accordance with subsection (13), where that subsection is applicable) shall be deemed to be a contribution made to the plan by the employer or individual, as the case may be, at the time the payment was made to the contributing entity; and

    • (b) subsection (11) shall not apply in respect of a contribution deemed by paragraph (a) to have been made to the plan.

Apportionment of Payments

  • (13) For the purposes of subsection (12), where employers or individuals make payments in a calendar year to a contributing entity to enable the contributing entity to make contributions to a registered pension plan and the payments are not made solely for the purpose of being contributed to the plan, the contributing entity shall

    • (a) determine, in a manner that is reasonable in the circumstances, the portion of each payment that relates to the plan;

    • (b) make the determination in such a manner that all contributions made by the contributing entity to the plan, other than contributions made by the contributing entity as an employer or former employer of members of the plan, are considered to be funded by payments made to the contributing entity by employers or individuals;

    • (c) in the case of payments remitted to the contributing entity by an employer, notify the employer in writing, by January 31 of the immediately following calendar year, of the portion, or of the method for determining the portion, of each such payment that relates to the plan; and

    • (d) in the case of payments remitted to the contributing entity by an individual, notify the administrator of the plan in writing, by January 31 of the immediately following calendar year, of the total amount of payments made in the year by the individual that relate to the plan.

Non-compliance by Contributing Entity

  • (14) Where a contributing entity does not comply with the requirements of subsection (13) as they apply in respect of payments made to the contributing entity in a calendar year to enable the contributing entity to make contributions to a registered pension plan,

    • (a) the plan becomes, on February 1 of the immediately following calendar year, a revocable plan; and

    • (b) the Minister may make any determinations referred to in subsection (13) that the contributing entity failed to make, or failed to make in accordance with that subsection.

Transferred Amounts

  • (15) For the purposes of subparagraph (b)(ii) of the description of A in subsection (2), paragraph (2.1)(b) and subparagraph (4)(b)(iv), an amount transferred for the benefit of an individual from a registered pension plan or a deferred profit sharing plan directly to a registered pension plan, a registered retirement savings plan, a registered retirement income fund or a deferred profit sharing plan is deemed to be an amount that was not paid to the individual.

Subsequent Events

  • (16) Except as otherwise expressly provided in this Part, each pension credit of an individual for a calendar year shall be determined without regard to any transactions, events or circumstances that occur subsequent to the year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/92-51, s. 7;
  • SOR/95-64, s. 2;
  • SOR/96-311, s. 6;
  • SOR/99-9, s. 5;
  • SOR/2003-328, s. 6;
  • SOR/2005-264, s. 17;
  • SOR/2007-116, s. 12(E).
 
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