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

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

Benefit Entitlement

  •  (1) For the purposes of subsection 8301(6), the benefit entitlement of an individual under a defined benefit provision of a registered pension plan in respect of a calendar year and an employer is the portion of the individual’s benefit accrual under the provision in respect of the year that can reasonably be considered to be attributable to the individual’s employment with that employer.

Benefit Accrual for Year

  • (2) For the purposes of subsection (1), and subject to subsections (6), (8) and (9), the benefit accrual of an individual under a defined benefit provision of a registered pension plan in respect of a calendar year is the amount computed in accordance with the following rules:

    • (a) determine the portion of the individual’s normalized pension under the provision at the end of the year that can reasonably be considered to have accrued in respect of the year;

    • (b) where the year is after 1989 and before 1995, determine the lesser of the amount determined under paragraph (a) and

      • (i) for 1990, $1,277.78,

      • (ii) for 1991 and for 1992, $1,388.89,

      • (iii) for 1993, $1,500.00, and

      • (iv) for 1994, $1,611.11; and

    • (c) where, in determining the amount of lifetime retirement benefits payable to the individual under the provision, there is deducted from the amount of those benefits that would otherwise be payable the amount of lifetime retirement benefits payable to the individual under a money purchase provision of a registered pension plan or the amount of a lifetime annuity payable to the individual under a deferred profit sharing plan, reduce the amount that would otherwise be determined under this subsection by 1/9 of the total of all amounts each of which is the pension credit of the individual for the year under such a money purchase provision or deferred profit sharing plan.

Normalized Pensions

  • (3) For the purposes of paragraph (2)(a), and subject to subsection (11), the normalized pension of an individual under a defined benefit provision of a registered pension plan at the end of a particular calendar year is the amount (expressed on an annualized basis) of lifetime retirement benefits that would be payable under the provision to the individual immediately after the end of the particular year if

    • (a) where lifetime retirement benefits have not commenced to be paid under the provision to the individual before the end of the particular year, they commenced to be paid immediately after the end of the year;

    • (b) where the individual had not attained 65 years of age before the time at which lifetime retirement benefits commenced to be paid (or are assumed by reason of paragraph (a) to have commenced to be paid) to the individual, the individual attained that age at that time;

    • (c) all benefits to which the individual is entitled under the provision were fully vested;

    • (d) where the amount of the individual’s lifetime retirement benefits would otherwise be determined with a reduction computed by reference to the individual’s age, duration of service or both, or with any other similar reduction, no such reduction were applied;

    • (d.1) no reduction in the amount of the individual’s lifetime retirement benefits were applied in respect of benefits described in any of clauses 8503(2)(a)(vi)(A) to (C);

    • (d.2) no adjustment that is permissible under subparagraph 8503(2)(a)(ix) were made to the amount of the individual’s lifetime retirement benefits;

    • (e) where the amount of the individual’s lifetime retirement benefits depends on the remuneration received by the individual in a calendar year (in this paragraph referred to as the “other year”) other than the particular year, the remuneration received by the individual in the other year were determined in accordance with the following rules:

      • (i) where the individual was remunerated for both the particular year and the other year as a person who rendered services on a full-time basis throughout each of the years, the remuneration received by the individual in the other year is identical to the remuneration received by the individual in the particular year,

      • (ii) where subparagraph (i) is not applicable and the individual rendered services in the particular year, the remuneration received by the individual in the other year is the remuneration that the individual would have received in the other year (or a reasonable estimate thereof determined by a method acceptable to the Minister) had the individual’s rate of remuneration in the other year been the same as the individual’s rate of remuneration in the particular year, and

      • (iii) where subparagraph (i) is not applicable and the individual did not render services in the particular year, the remuneration received by the individual in the other year is the remuneration that the individual would have received in the other year (or a reasonable estimate thereof determined by a method acceptable to the Minister) had the individual’s rate of remuneration in the other year been the amount that it is reasonable to consider would have been the individual’s rate of remuneration in the particular year had the individual rendered services in the particular year;

    • (f) where the amount of the individual’s lifetime retirement benefits depends on the individual’s remuneration and all or a portion of the remuneration received by the individual in the particular year is treated under the provision as if it were remuneration received in a calendar year preceding the particular year for services rendered in that preceding year, that remuneration were remuneration for services rendered in the particular year;

    • (g) where the amount of the individual’s lifetime retirement benefits depends on the individual’s remuneration and the particular year is after 1989 and before 1995, benefits, to the extent that they can reasonably be considered to be in respect of the following range of annual remuneration, were excluded:

      • (i) where the particular year is 1990, the range from $63,889 to $86,111,

      • (ii) where the particular year is 1991 or 1992, the range from $69,444 to $86,111,

      • (iii) where the particular year is 1993, the range from $75,000 to $86,111, and

      • (iv) where the particular year is 1994, the range from $80,556 to $86,111;

    • (h) where

      • (i) the amount of the individual’s lifetime retirement benefits depends on the individual’s remuneration,

      • (ii) the formula for determining the amount of the individual’s lifetime retirement benefits includes an adjustment to the individual’s remuneration for one or more calendar years,

      • (iii) the adjustment to the individual’s remuneration for a year (in this paragraph referred to as the “specified year”) consists of multiplying the individual’s remuneration for the specified year by a factor that does not exceed the ratio of the average wage for the year in which the amount of the individual’s lifetime retirement benefits is required to be determined to the average wage for the specified year (or a substantially similar measure of the change in the wage measure), and

      • (iv) the adjustment may reasonably be considered to be made to increase the individual’s remuneration for the specified year to reflect, in whole or in part, increases in average wages and salaries from that year to the year in which the amount of the individual’s lifetime retirement benefits is required to be determined,

      the formula did not include the adjustment to the individual’s remuneration for the specified year;

    • (i) where the amount of the individual’s lifetime retirement benefits depends on the Year’s Maximum Pensionable Earnings for calendar years other than the particular year, the Year’s Maximum Pensionable Earnings for each such year were equal to the Year’s Maximum Pensionable Earnings for the particular year;

    • (j) where the amount of the individual’s lifetime retirement benefits depends on the actual amount of pension (in this paragraph referred to as the “statutory pension”) payable to the individual under the Canada Pension Plan or a provincial plan (as defined in section 3 of that Act), the amount of statutory pension (expressed on an annualized basis) were equal to

      • (i) 25 per cent of the lesser of the Year’s Maximum Pensionable Earnings for the particular year and

        • (A) in the case of an individual who renders services throughout the particular year on a full-time basis to employers who participate in the plan, the aggregate of all amounts each of which is the individual’s remuneration for the particular year from such an employer, and

        • (B) in any other case, the amount that it is reasonable to consider would be determined under clause (A) if the individual had rendered services throughout the particular year on a full-time basis to employers who participate in the plan, or

      • (ii) at the option of the plan administrator, any other amount determined in accordance with a method for estimating the statutory pension that can be expected to result in amounts substantially similar to amounts determined under subparagraph (i);

    • (k) where the amount of the individual’s lifetime retirement benefits depends on a pension (in this paragraph referred to as the “statutory pension”) payable to the individual under Part I of the Old Age Security Act, the amount of statutory pension payable for each calendar year were equal to the aggregate of all amounts each of which is the amount of the full monthly pension payable under Part I of the Old Age Security Act for a month in the particular year;

    • (l) except as otherwise expressly permitted in writing by the Minister, where the amount of the individual’s lifetime retirement benefits depends on the amount of benefits (other than public pension benefits or similar benefits of a country other than Canada) payable under another benefit provision of a pension plan or under a deferred profit sharing plan, the amounts of the other benefits were such as to maximize the amount of the individual’s lifetime retirement benefits;

    • (m) where the individual’s lifetime retirement benefits would otherwise include benefits that the plan is required to provide by reason of a designated provision of the law of Canada or a province (within the meaning assigned by section 8513), or that the plan would be required to provide if each such provision were applicable to the plan with respect to all its members, such benefits were not included;

    • (n) where

      • (i) the individual attained 65 years of age before lifetime retirement benefits commenced to be paid (or are assumed by reason of paragraph (a) to have commenced to be paid) to the individual, and

      • (ii) an adjustment is made in determining the amount of those benefits for the purpose of offsetting, in whole or in part, the decrease in the value of lifetime retirement benefits that would otherwise result by reason of the deferral of those benefits after the individual attained 65 years of age,

      that adjustment were not made, except to the extent that the adjustment exceeds the adjustment that would be made on an actuarially equivalent basis;

    • (o) except as otherwise provided by subsection (4), where the amount of the individual’s lifetime retirement benefits depends on

      • (i) the form of benefits provided with respect to the individual under the provision (whether or not at the option of the individual), including

        • (A) the benefits to be provided after the death of the individual,

        • (B) the amount of retirement benefits, other than lifetime retirement benefits, provided to the individual, or

        • (C) the extent to which the lifetime retirement benefits will be adjusted to reflect changes in the cost of living, or

      • (ii) circumstances that are relevant in determining the form of benefits,

      the form of benefits and the circumstances were such as to maximize the amount of the individual’s lifetime retirement benefits on commencement of payment;

    • (p) where the amount of the individual’s lifetime retirement benefits depends on whether the individual is totally and permanently disabled at the time at which retirement benefits commence to be paid to the individual, the individual were not so disabled at that time; and

    • (q) where lifetime retirement benefits have commenced to be paid under the provision to the individual before the end of the particular year, benefits payable as a consequence of cost-of-living adjustments described in paragraph 8303(5)(k) were disregarded.

Optional Forms

  • (4) Where the terms of a defined benefit provision of a registered pension plan permit a member to elect to receive additional lifetime retirement benefits in lieu of benefits that would, in the absence of the election, be payable after the death of the member if the member dies after retirement benefits under the provision commence to be paid to the member, paragraph (3)(o) applies as if the following elections were not available to the member:

    • (a) an election to receive additional lifetime retirement benefits, not exceeding additional benefits determined on an actuarially equivalent basis, in lieu of all or any portion of a guarantee that retirement benefits will be paid for a minimum period of 10 years or less, and

    • (b) an election to receive additional lifetime retirement benefits in lieu of retirement benefits that would otherwise be payable to an individual who is a spouse or common-law partner or former spouse or common-law partner of the member for a period beginning after the death of the member and ending with the death of the individual, where

      • (i) the election may be made only if the life expectancy of the individual is significantly shorter than normal and has been so certified in writing by a medical doctor licensed to practise under the laws of a province or of the place where the individual resides, and

      • (ii) the additional benefits do not exceed additional benefits determined on an actuarially equivalent basis and on the assumption that the individual has a normal life expectancy.

Termination of Entitlement to Benefits

  • (5) For the purposes of subsection (3), where an individual ceased in a calendar year to be entitled to all or part of the lifetime retirement benefits provided to the individual under a defined benefit provision of a registered pension plan, the normalized pension of the individual under the provision at the end of the year shall be determined on the assumption that the individual continued to be entitled to those benefits immediately after the end of the year.

Defined Benefit Offset

  • (6) Where the amount of lifetime retirement benefits provided under a particular defined benefit provision of a registered pension plan to a member of the plan depends on the amount of lifetime retirement benefits provided to the member under one or more other defined benefit provisions of registered pension plans, the benefit accrual of the member under the particular provision in respect of a calendar year is the amount, if any, by which

    • (a) the amount that would, but for this subsection, be the benefit accrual of the member under the particular provision in respect of the year if the benefits provided under the other provisions were provided under the particular provision

    exceeds

    • (b) the amount that would be the benefit accrual of the member under the other provisions in respect of the year if the other provisions were a single provision.

Offset of Specified Multi-employer Plan Benefits

  • (7) Where the amount of an individual’s lifetime retirement benefits under a defined benefit provision (in this subsection referred to as the “supplemental provision”) of a registered pension plan depends on the amount of benefits payable under a defined benefit provision of a specified multi-employer plan, the defined benefit provision of the specified multi-employer plan shall be deemed to be a money purchase provision for the purpose of determining the benefit accruals of the individual under the supplemental provision.

Transition Rule — Career Average Benefits

  • (8) Where

    • (a) on March 27, 1988 lifetime retirement benefits under a defined benefit provision of a pension plan were determined as the greater of benefits computed on a career average basis and benefits computed on a final or best average earnings basis,

    • (b) the method for determining lifetime retirement benefits under the provision was not amended after March 27, 1988 and before the end of a particular calendar year, and

    • (c) it was reasonable to expect, on January 1, 1990, that the lifetime retirement benefits to be paid under the provision to at least 75 per cent of the members of the plan on that date (other than members to whom benefits do not accrue under the provision after that date) will be determined on a final or best average earnings basis,

    at the option of the plan administrator, benefit accruals under the provision in respect of the particular year may, where the particular year is before 1992, be determined without regard to the career average formula.

Transition Rule — Benefit Rate Greater Than 2 Per Cent

  • (9) Subject to subsection (6), where

    • (a) the amount of lifetime retirement benefits provided under a defined benefit provision of a registered pension plan to a member of the plan is determined, in part, by multiplying the member’s remuneration (or a function of the member’s remuneration) by one or more benefit accrual rates, and

    • (b) the largest benefit accrual rate that may be applicable is greater than 2 per cent,

    the member’s benefit accrual under the provision in respect of 1990 or 1991 is the lesser of

    • (c) the member’s benefit accrual otherwise determined, and

    • (d) 2 per cent of the aggregate of all amounts each of which is the amount that would, if the definition compensation in subsection 147.1(1) of the Act were read without reference to subparagraphs (a)(iii) and (iv) and paragraphs (b) and (c) thereof, be the member’s compensation for the year from an employer who participated in the plan in the year for the benefit of the member.

Period of Reduced Remuneration

  • (10) For the purposes of paragraph (9)(d), where a member of a registered pension plan is provided with benefits under a defined benefit provision of the plan in respect of a period in 1990 or 1991

    • (a) throughout which, by reason of disability, leave of absence, lay-off or other circumstance, the member rendered no services, or rendered a reduced level of services, to employers who participate in the plan, and

    • (b) throughout which the member received no remuneration, or a reduced rate of remuneration,

    the member’s compensation shall be determined on the assumption that the member received remuneration for the period equal to the amount of remuneration that it is reasonable to consider the member would have received if the member had rendered services throughout the period on a regular basis (having regard to the services rendered by the member before the period) and the member’s rate of remuneration had been commensurate with the member’s rate of remuneration when the member did render services on a regular basis.

Anti-avoidance

  • (11) Where the terms of a defined benefit provision of a registered pension plan can reasonably be considered to have been established or modified so that a pension credit of an individual for a calendar year under the provision would, but for this subsection, be reduced as a consequence of the application of paragraph (3)(g), that paragraph shall not apply in determining the individual’s normalized pension under the provision in respect of 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. 3;
  • SOR/2001-67, s. 1;
  • SOR/2001-188, s. 6.
 
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