Retirement Compensation Arrangements

On this page

• Overview
• General information
• Employer responsibilities
• Custodian responsibilities
• Penalties and interest
• Appendix 1 – Person who bought an interest in an RCA 
• Appendix 2 – Additional topics

Overview

This page is for you if one of the following applies:

• You are an employer and you make contributions to a custodian for a retirement compensation arrangement (RCA). For an explanation of RCAs, see Definition of an RCA
• You are a custodian of an RCA trust who does any of the following:
  • receives contributions from an employee or employer for an RCA
  • files a T3-RCA tax return for an RCA trust
  • makes distributions out of an RCA trust to a beneficiary
• You buy an interest in an RCA.
• You submitted a pension plan for registration and the CRA refused to register the plan as a registered pension plan (RPP). In this case, the CRA generally consider that any contributions made to the plan before the date of final determination are contributions to an RCA.

Before you start, be sure to read Appendix 1.

Confidentiality of information

Under the Privacy Act, the personal information you give on RCA information and tax returns and related forms can be used only for the purposes authorized by law.

Income Tax Act references

Unless otherwise stated, all legislative references are to the Income Tax Act or the Income Tax Regulations.

General information

Definition of an RCA

A retirement compensation arrangement (RCA) is a plan or an arrangement under which an employer, former employer, and in some cases an employee makes contributions to a person or partnership, referred to as a custodian.

The custodian holds the funds in trust with the intent of eventually distributing them to the employee, former employee or other beneficiary on, after, or in contemplation of the following:

• an employee's retirement
• an employee's loss of an office or employment
• any substantial change in the services the employee provides (for example, a senior corporate director who, after termination, is retained on a part time basis to teach a management course to new trainees may be considered to have substantially changed the services being provided for the purposes of the definition of an RCA)

An employer or former employer may acquire an interest in a life insurance policy (including an annuity) to fund benefits on, after, or in contemplation of any of the situations listed above. In that case, the Canada Revenue Agency (CRA) would consider the interest to be the property of an RCA and the employer to be the custodian of the RCA.

In most situations, there is one RCA trust under an RCA. For simplicity of presentation, the information in this page reflects such situations. However, there could be a situation where there is more than one RCA trust under an RCA. With regard to such situations, the information in this page should be read with necessary modifications to correspond with the Income Tax Act and the Income Tax Regulations. For help with completing Form T3-RCA, Retirement Compensation Arrangement (RCA) Part XI.3 Tax Return, and for information on the Employer responsibilities and Custodian responsibilities, call the CRA at 1-800-959-8281.

Refundable tax

The contributions made by the employer to the custodian are taxable under Part XI.3 of the Act. The withholding tax under income tax regulation 103(7) is equal to 50% of the amount of the contributions. The employer sends this tax to the Canada Revenue Agency (CRA) for the RCA trust. However, the tax is refundable to the custodian upon processing of the T3-RCA, Retirement Compensation Arrangement (RCA) Part XI.3 Tax Return, taking into account any distributions made out of the RCA trust and income earned by the trust during the year.

Any income from business or property, any capital gains earned in the RCA trust and any employee contributions are also taxable under Part XI.3 of the Act at the 50% refundable tax rate. The custodian sends this tax to the CRA and the CRA refunds the tax as distributions are made.

The custodian has to file a T3-RCA, Retirement Compensation Arrangement (RCA) Part XI.3 Tax Return each year, even if there has been no activity in an RCA trust in the year. When filing the tax return, the custodian ensures that the correct amount of refundable tax has been sent to CRA or has been refunded to the RCA trust.

Distributions

All distributions from an RCA trust are taxable. The custodian has to provide the beneficiary with a T4A-RCA slip, Statement of Distributions from a Retirement Compensation Arrangement (RCA), showing the amount of distributions and the income tax deducted. The beneficiary reports the amount distributed as income and claims the income tax deducted on their income tax and benefit return for the year the income is received.

Annuity contract

When the custodian of an RCA buys an annuity contract to be held by the beneficiary as the legal owner, the CRA  considers that the amount paid to buy the contract is a taxable distribution out of the RCA trust to the beneficiary. The full amount is taxable in the year the custodian buys the contract and the custodian has to issue a T4A-RCA slip showing the amount of the distribution and the income tax deducted.

Excluded arrangements

Certain retirement arrangements (such as registered pension plans, deferred profit sharing plans, salary deferral arrangements, and employee trusts) do not qualify as RCAs. For other excluded arrangements, see the definition of retirement compensation arrangement in subsection 248(1) of the Act.

Employer responsibilities

This section covers the following employer responsibilities:

• filing Form T733, Application for a Retirement Compensation Arrangement (RCA) Account Number, to apply for employer (RC) and custodian (T) trust account numbers
• withholding refundable tax and remitting it to the CRA using Form T901B, Statement of Account
• filing the T737-RCA slips (T737-RCA Statement of Contributions Paid to a Custodian of a Retirement Compensation Arrangement (RCA)) and summary (T737-RCASUM, Summary of Contributions Paid to a Custodian of a Retirement Compensation Arrangement (RCA)), to report contributions you made to the custodian of an RCA trust
• reporting deductible RCA contributions to the employee
• providing a certificate of amendment when there is a change to the legal name

Applying for RC and T accounts

After establishing an RCA with a custodian, you have to complete Form T733. The CRA uses this form to open the following two accounts:

• the RC employer account that the CRA and the employer use to monitor the 50% refundable tax on hand for contributions made to the custodian
• the T custodian trust account that the CRA and the custodian use to monitor the balance of the refundable tax on hand for the RCA trust

When the CRA receives your completed Form T733 along with a copy of the RCA trust agreement (with an original signature), the CRA will give you an employer account number starting with the letters RC. The CRA will also give the custodian a separate custodian trust account number starting with the letter T.

• the employer uses the RC employer account number when remitting the refundable tax on contributions made to the custodian
• the custodian uses the T custodian trust account number when filing a T3-RCA tax return and when remitting refundable tax on employee contributions and on income earned in the RCA trust

Completing Form T733, Application for a Retirement Compensation Arrangement (RCA) Account Number

You have to enter the following information on Form T733:

Filing Form T733

Send the completed original of Form T733 and a signed copy of the RCA trust agreement to:

RCA Unit
Winnipeg Tax Centre
66 Stapon Rd
Winnipeg MB  R3C 3M2

Keep a photocopy for your records.

Withholding and remitting the refundable tax

When an employer makes a contribution to a custodian for an RCA trust, the employer has to withhold tax equal to 50% of the amount of the contribution and remit the tax to the CRA. For more information about remitting the refundable tax, see Remitting the refundable tax.

If an employer does not withhold the 50% refundable tax on contributions made to a custodian, the employer has to remit to the CRA an amount equal to the amount of the contribution made to the custodian. Failure to withhold tax may result in an excessive contribution.

For example, on a $5,000 contribution to an RCA, $2,500 has to be withheld and remitted to the CRA and $2,500 goes to the custodian. If the employer fails to withhold the tax and contributes $5,000 directly to the RCA custodian, the law requires the employer to remit $5,000 to the CRA. In this case, the gross RCA contribution would be considered to be $10,000, which may be in excess of the RCA's terms and provisions. For more information, see Refundable tax on contributions.

The CRA will apply a penalty if the employer fails to comply with withholding requirements. For more information, see Penalties for not withholding tax.

If an employer made payments to acquire an interest in a life insurance policy that the CRA considers to be an RCA, the employer has to remit to the CRA an amount of refundable tax equal to those payments.

Withholding refundable tax on transfers between RCA trusts

Subsection 207.6(7) provides special rules that govern the transfer of amounts between RCA trusts when all of the following conditions are met:

• a lump-sum amount is transferred directly from one RCA trust (the transferring plan) to another RCA trust (the receiving plan)
• the receiving plan does not have a non-resident custodian
• the receiving plan is not a foreign plan that is considered by subsection 207.6(5) to be an RCA for Canadian residents participating in the plan

To make sure the refundable tax is transferred from the transferring plan's account to the receiving plan's account, representatives from both plans should have signed a letter of agreement. When you send this letter to the CRA, the CRA will be able to transfer the refundable tax from the transferring plan's account to the receiving plan's account. For more information, see Transferring amounts between RCA trusts.

You may receive funds from an RCA trust that you want to transfer to another RCA trust. If the transfer does not meet the conditions described above, you should receive a T4A-RCA slip, Statement of Distributions from a Retirement Compensation Arrangement (RCA), from the RCA trust. You have to include in income the refund of employer contributions shown in box 12 of the T4A-RCA slip. When you contribute the funds to the custodian of another RCA trust, you have to withhold 50% refundable tax on the funds you contribute. You have to remit the 50% refundable tax to the CRA and prepare the T737-RCA slips and summary to report the amounts you contribute to the other RCA trust.

Remitting the refundable tax

The CRA has to receive the refundable tax on or before the 15th day of the month after the month in which it was withheld. If you remit this tax late, you will be subject to a penalty. For more information, see Refundable tax on contributions and Penalties for not remitting the refundable tax.

As of January 1, 2024, payments or remittances to the Receiver General of Canada should be made as an electronic payment if the amount is more than $10,000. Payers may face a penalty, unless they cannot reasonably remit or pay the amount electronically. For more information, go to canada.ca/payments.

Send your first payment of refundable tax to the RCA Unit at the Winnipeg Tax Centre by cheque or money order made out to the Receiver General for Canada.

If you have to remit this tax but have not received an RC employer account number, complete Form T733 and send it with your payment directly to the Winnipeg Tax Centre.

You can print or download Form T733 by visiting Forms and publications. You may also request the form by calling 1-800-959-5525.

After the CRA receives this information, it will send you confirmation of your RC employer account number. Also, after the CRA processes the payment, it will acknowledge receipt and issue Form T901B, Statement of Account, which includes a blank remittance voucher.

Filing the T737-RCA slips and summary to report contributions you made to the custodian of an RCA trust

To report the amount of contributions you made to the custodian, you have to submit a completed Form T737-RCA SUM, Summary of Contributions Paid to a Custodian of a Retirement Compensation Arrangement (RCA), and the related T737-RCA slips. Statement of Contributions Paid to a Custodian of a Retirement Compensation Arrangement (RCA). If there has been a change to the business name or to the authorized contact, send documentation outlining the change to the CRA, along with the T737-RCA Summary and the slips. You have to file the slips and summary no later than the last day of February following the calendar year in which you made contributions to the custodian. The CRA will apply a penalty if you are late in filing the slips or the summary. For more information, see Penalties and interest. If you did not make any contributions during the year, you do not have to file the T737-RCA slips or the summary.

Completing the T737-RCA slip, Statement of Contributions Paid to a Custodian of a Retirement Compensation Arrangement (RCA)

The T737-RCA slip is available as a one page form and as a PDF fillable form. To get either version, go to Forms and publications.

Enter the following information on the T737-RCA slip:

Completing Form T737-RCA SUM, Summary

Enter the following information on the T737-RCA SUM, Summary:

Distributing the slips and summary

Send the CRA one copy of every T737-RCA slip with the completed original of the T737-RCA Summary, and send them with your payment for any balance owing to:

RCA Unit
Winnipeg Tax Centre
66 Stapon Rd
Winnipeg MB  R3C 3M2

Send the slips and summary no later than the last day of February following the year to which they relate.

Send two copies of every T737-RCA slip to the custodian for this RCA no later than the last day of February following the year to which the slip relates.

Keep a photocopy of the completed T737-RCA Summary and one copy of every T737-RCA slip for your records.

Electronic fillable slips

If you use the PDF fillable T737-RCA slip, you can print it on plain white paper. You can also make photocopies to distribute to the custodian. The CRA now accepts copies of the forms, not only original pre-printed forms.

If you file a T737-RCA slip or a T737-RCA Summary late or distribute a slip late, you will be subject to a late-filing penalty. For more information, see Penalties and interest.

Reporting deductible RCA contributions to the employee

Include in box 20 of the T4 slip, Statement of Remuneration Paid, which you issue to the employee any deductible RCA contributions you withheld from income for that employee. Do not include amounts that are not deductible. If the amount in box 20 of the T4 slip includes registered pension plan contributions and deductible RCA contributions, send a letter with the employee's copy of the T4 slip showing each amount separately to the CRA.

For more information on the deductibility of RCA contributions, see Appendix 2. 

Change to the employer's legal name

If the employer's legal name has changed, the employer has to send a notification letter to:

RCA Unit
Winnipeg Tax Centre
66 Stapon Rd
Winnipeg MB  R3C 3M2

The letter has to include the employer's payroll account number and supporting documents.

For example, in the case of a corporation, the CRA requires a copy of the “certificate of amendment” or “articles of amendment” issued by the provincial, territorial or federal incorporating authority or registrar of corporations that approved the new name. For an unincorporated entity (such as an entity established by a constitution or trust deed), the CRA requires a copy of a resolution or written agreement signed by the directors or trustees of the entity indicating the new name and showing the effective date of the change of name.

Custodian responsibilities

This section discusses the following custodian responsibilities:

• Receiving employee contributions.
• Remitting refundable tax to the Canada Revenue Agency (CRA) on amounts received directly from an RCA member (employee), using the remittance voucher on Form T901B, Statement of Account.
• Completing and filing Form T3-RCA Retirement Compensation Arrangement (RCA) Part XI.3 Tax Return, and remitting the refundable tax owing.
• Providing the CRA with any change of address information (information to be supplied by an authorized individual).
• Providing the CRA with any information on changes to the RCA's custodian. (The CRA would need copies of the amended trust agreement signed by both the resigning and the new custodian of the RCA).
• Providing the CRA with details of any funds transferred to or from another RCA trust.
• Filing Form T735, Application for a Remittance Number for Tax Withheld from a Retirement Compensation Arrangement (RCA), to apply for a remittance account number for income tax withheld on distributions.
• Withholding income tax on distributions made out of the RCA trust.
• Filing Form PD7A, Remittance Form – Statement of Account for Current Source Deductions, to remit income tax withheld on distributions.
• Filing the T4A-RCA slips and summary to report distributions made out of the RCA trust.
• Filing Form NR76, Non-resident Tax – Statement of Account, to remit income tax withheld on distributions to non-residents.
• Filing the NR4 slip and Summary to report distributions to non-residents.

Receiving employee contributions

Under the terms of some employment agreements, an employee is required to contribute an amount to the RCA trust.

• some agreements require the employer to withhold the amounts from the employee's income
• other agreements require the employee to make these contributions directly to the custodian

To be deductible by the employee under paragraph 8(1)(m.2), the total amount contributed by the employee for the year cannot be more than the total amount contributed in the year by the employer for the employee. Refer to Appendix 2 for other conditions that apply to deductions of employee contributions to RCAs.

Contributions that the employer withheld from income

If you receive a contribution for an employee that was withheld from income by the employer, you have to send a letter to the employee. The letter must also explain whether the amount is deductible and, if so, to deduct it on line 20700 of their income tax and benefit return. The employee may need this letter to support the deduction on their return.

When an employer makes a contribution to a custodian for an RCA trust, the employer has to withhold tax equal to 50% of the contribution and remit the refundable tax to the CRA. The employer will issue you a T737-RCA slip, Statement of Contributions Paid to a Custodian of a Retirement Compensation Arrangement (RCA), to tell you the amount of tax they withheld and remitted to the CRA.

Amounts received directly from an RCA member (employee)

If the employer receives a contribution directly from an employee, send a letter of acknowledgement to them. The letter must also explain whether the amount is deductible and, if so, to deduct it on line 20700 of their income tax and benefit return. The employee may need this letter to support the deduction on their return.

Remitting the refundable tax on amounts received directly from an RCA member (employee)

Contributions that an employee made directly to an RCA trust will not have refundable tax withheld. However, the custodian of the trust can remit the refundable tax on all contributions that the employee made. To to this, use the remittance voucher provided by the CRA on Form T901B, Statement of Account, which is available only in a personalized, pre-printed format. The CRA will issue Form T901B after it processes your first payment. The refundable tax under Part XI.3 for employee contributions is calculated on the Form T3-RCA, Retirement Compensation Arrangement (RCA) Part XI.3 Tax Return.

Filing a  Form T3-RCA, Retirement Compensation Arrangement (RCA) Part XI.3 Tax Return

As a custodian of an RCA trust, you have to file Form T3-RCA, Retirement Compensation Arrangement (RCA) Part XI.3 Tax Return, every year, no later than 90 days after the end of the RCA trust's tax year. The tax year of an RCA trust is the calendar year. The CRA will apply a penalty if you file this return late. For more information, see Penalties and interest.

Tax on RCA advantages and prohibited investments

An RCA custodian is subject to tax under section 207.62 when an advantage as defined under subsection 207.5(1), is obtained in relation to the RCA.

An RCA custodian is also subject to tax under section 207.61 when an RCA has a prohibited investment as defined under subsection 207.5(1).

Under section 207.63, a specified beneficiary of an RCA as defined under subsection 207.5(1), may also be liable for tax under section 207.61 or 207.62.

Waiver or cancellation of tax

Under section 207.64, the Minister of National Revenue may waive or cancel all or part of the tax payable under sections 207.61 to 207.63 for a prohibited investment or in respect of an advantage if the Minister of National Revenue is satisfied that it is just and equitable to do so after reviewing all factors, including whether:

• the tax arose because of a reasonable error
• the extent to which the transaction or series of transactions that gave rise to the tax also gave rise to another tax under the Income Tax Act

Completing the T3-RCA tax return

Enter the following information when you complete the T3-RCA tax return:

Step 1 – Supporting documents

Tick (✓) the yes or no boxes as they apply. If you answer yes to any of the questions in Step 1, enter the information requested or send the applicable documents with the T3-RCA tax return to the CRA, as indicated.

If you answered yes to question 8, send the CRA a copy of the loan agreement.

If you answered yes to question 9, send the CRA a copy of the letter of agreement between the two RCA trusts, and provide the custodian trust account number of the other RCA. For more information about the information that you should include in the letter of agreement, see Transferring amounts between RCA trusts.

Step 2 – Details of contributions received during the year

Step 3 – Calculating the refundable tax on hand for the current year

Step 4 – Election under subsection 207.5(2) to recover refundable tax on hand

In some cases, you may benefit from making an election so that the refundable tax on hand at the end of the tax year equals the adjusted amount of the fair market value of all the property held in the RCA trust at the end of the tax year.

To make this election, you have to complete and sign Step 4 of the T3-RCA tax return. You can make this election for one or more tax years. If the custodian does not sign the election, the CRA will not refund any amount.

If lines 34 and 35 do not provide enough space for all the debt obligations, send a separate sheet to the CRA. If you enter amounts for debt obligations or shares listed on a designated stock exchange (on line 37), send details of the amounts with the T3-RCA tax return to the CRA.

Property of the RCA trust (at the end of the tax year):

Step 5 – Part XI.3 tax payable or refundable

Complete Step 5 to determine the amount of refundable tax payable or refundable.

Step 6 – Tax on advantages and prohibited investments

If the RCA owes tax on prohibited investments under section 207.61 or advantages under section 207.62, complete Step 6.

Step 7 – Refundable tax remitted

Complete Step 7 to calculate the amount of refundable tax remitted during the tax year.

Step 8 – Refund or balance owing

To determine your refund or balance owing, complete Step 8.

Step 9 – Certification

The custodian's authorized representative has to complete and sign this area.

Filing the T3-RCA tax return

Send the completed T3-RCA tax return no later than 90 days after the end of the RCA's tax year.

Filing through EFILE

You have the option to file this return through EFILE. For more information about this filing method, go to EFILE for electronic filers.

Filing on paper

Send the completed return together with all required attachments and payment for any balance owing, to:

RCA Unit
Winnipeg Tax Centre
66 Stapon Rd
Winnipeg MB  R3C 3M2

Send this tax return separately from any other return.

If you need to change a return after you send it to the CRA, do not file another return for that tax year. Send a completed Form T3-ADJ, T3 Adjustment Request, or a letter providing the details of the change to the CRA.

Keep a photocopy for your records.

Applying for an RP or NR account number for income tax withheld on distributions 

When you are ready to make the first distribution out of the retirement compensation arrangement (RCA) trust to a beneficiary that is a resident of Canada, a non-resident, or both, you should apply for a remittance account number by completing Form T735, Application for a Remittance Number for Tax Withheld from a Retirement Compensation Arrangement (RCA). The CRA uses this form to open two accounts:

• The RP employer remittance account, which is a payroll account for the RCA trust only
• The NR account, which is a non-resident deduction remittance account beginning with the letters NRQ. This account is used to report payments you make to non-residents and for the income tax you withhold from the payments. For more information about the reporting requirements, see Reporting distributions made to non-residents of Canada.

Completing Form T735, Application for a Remittance Number for Tax Withheld from a Retirement Compensation Arrangement (RCA) 

The custodian should complete sections A and B and the certification area of Form T735.

Section A

If you are a custodian, you have to complete section B.

Section B – Custodian

Section C – Person who bought an interest in an RCA 

If you bought an interest in an RCA, you have to complete Section C.

Filing Form T735 

Send the completed original of Form T735 to:

RCA Unit
Winnipeg Tax Centre
66 Stapon Rd
Winnipeg MB  R3C 3M2

Keep a photocopy for your records.

Withholding and remitting income tax on distributions 

Withholding income tax on distributions

As a custodian, you have to withhold income tax on any distributions you make to beneficiaries out of the RCA trust. This includes periodic payments and lump-sum payments. You usually have to remit this tax on or before the 15th day of the month after you withheld it.

To calculate the amount of income tax you have to deduct and to determine when you have to remit the income tax, see canada.ca/payroll-calculate-deductions, and select Special payments chart.

If you do not deduct the required tax from these payments (including payments made to non-residents), the CRA will charge you a penalty. For more information, see Income tax on distributions.

If you buy an annuity contract for the beneficiary, the CRA considers that the amount paid to buy the contract is a taxable distribution to the beneficiary out of the RCA trust. The full amount is taxable in the year you buy the contract and you have to withhold income tax from this amount.

If you distributed an amount out of the RCA trust to a non-resident, see Distributions to non-residents of Canada.

When you are ready to make the first distribution out of the RCA trust to a beneficiary, you have to file a completed Form T735 to apply for a remittance account number. For more information, see Applying for an RP or NR account number for income tax withheld on distributions.

Remitting income tax withheld on distributions made out of the RCA trust using Form PD7A, Remittance Form Voucher – Statement of Account for Current Source Deductions

The PD7A is available only in personalized, pre-printed format. Our agents will personalize and mail them to you. To replace lost remittance vouchers or to get a limited number of personalized forms, call 1-800-959-5525.

Your remitter type will determine the frequency and the due dates to remit income tax withheld on distributions. For more information, see canada.ca/payroll-calculate-deductions, and select Special payments chart.

Remitting income tax withheld on distributions before you receive an account number

If you have withheld income tax as required but have not received a remittance account number or a non-resident tax deduction remittance account number, or if you have filed Form T735 but have not received Form PD7A in time for your next payment, do not delay making the payment.

Send it to:

RCA Unit
Winnipeg Tax Centre
66 Stapon Rd
Winnipeg MB  R3C 3M2

Send your payment with a note stating that you did not receive Form PD7A. In your note, you should also give the following information:

• your name and address
• the full name of the RCA trust
• if you are the custodian, the T custodian trust account number
• the month during which the tax was withheld

When the CRA receives this information, the CRA will send you Form T735 with an assigned remittance account number. When you get this form, complete it and send it to the RCA Unit at the Winnipeg Tax Centre. Once the CRA processes the payment, the CRA will send you a receipt and a blank Form PD7A.

Filing  T4A-RCA slips and the summary to report distributions made out of an RCA trust 

A custodian who makes a distribution out of an RCA trust has to file a T4A-RCA SUM, Summary of Distributions from a Retirement Compensation Arrangement (RCA), and the related T4A-RCA slips, Statement of Distributions from a Retirement Compensation Arrangement (RCA).

You have to file the T4A-RCA slips and summary no later than the last day of February following the year you made the distributions or bought the interest, as the case may be.

Completing the T4A-RCA slip, Statement of Distributions from a Retirement Compensation Arrangement (RCA) 

The T4A-RCA slip is available as one-page form and as a PDF fillable version.  You can get these forms from our website.

You have to complete a T4A-RCA slip for each beneficiary who received a payment and for each person who sold an interest in an RCA, as the case may be. In some cases, you have to prepare a T4A-RCA slip for amounts the RCA trust refunded to the employer or the employee.

You have to enter the following information on the T4A-RCA slips:

Completing the T4A-RCA SUM, Summary of Distributions from a Retirement Compensation Arrangement (RCA) 

You have to enter the following information on the T4A-RCA Summary:

Distributing the slips and summary 

Attach one copy of every T4A-RCA slip to the completed T4A-RCA Summary, and send them with your payment for any balance owing to:

RCA Unit
Winnipeg Tax Centre
66 Stapon Rd
Winnipeg MB   R3C 3M2

Send the slips and summary no later than the last day of February following the calendar year to which they relate.

Send two copies of every T4A-RCA slip to the custodian no later than the last day of February following the calendar year to which the slip relates.

If you are a custodian, attach a copy of the T4A-RCA Summary to your T3-RCA tax return.

Keep a photocopy of the completed T4A-RCA Summary and one copy of every T4A-RCA slip for your records.

Electronic fillable slips

If you use PDF fillable T4A-RCA slips, you can print them on plain white paper. You can also make photocopies to distribute to the custodian. The CRA accepts copies of our forms, not only the preprinted original forms.

If you file the T4A-RCA slips and summary late or distribute the information slips late, you may be subject to a late-filing penalty. For more information, see Penalties and interest.

Filing the final T4A-RCA slips and summary 

What should you do if your RCA closes?

• Remit all income tax deductions from the distributions.
• Complete the T4A-RCA slips and the T4A-RCA Summary and send them to the Winnipeg Tax Centre within 30 days of the day that the RCA closes.
• Give copies of the T4A-RCA slips to the appropriate individuals.
• File the final T3-RCA, Retirement Compensation Arrangement (RCA) Part XI.3 Tax Return.

Distributions to non-residents of Canada 

Part XIII of the Act imposes a withholding tax on certain amounts paid or credited to persons not resident in Canada. For a general description of Part XIII tax, go to Part XIII withholding tax.

Withholding income tax on distributions made to non-residents of Canada 

As a custodian, you have to withhold income tax on any distributions you make out of the RCA trust to non-resident beneficiaries. This applies to periodic payments and lump-sum payments.

The income tax is 25% of the amount you paid or credited to the non-resident. However, if the payments qualify as "periodic pension payments" the income tax convention or agreement between Canada and the other country may reduce the rate of Part XIII tax. For more information about non-resident income tax, the treaty countries, and treaty rates, see the following publications:

• canada.ca/cranr4, and select NR4 slip
• Non-resident Tax Calculator
• Part XIII withholding tax

Remitting income tax withheld on distributions made to non-residents of Canada 

Use the non-resident tax remittance voucher of Form NR76, Non-Resident Tax – Statement of Account, to remit the income tax you withheld under Part XIII of the Act. You have to remit this tax on or before the 15th day of the month after the month you withheld it. For more information on Form NR76 and on remitting the non-resident withholdings, see canada.ca/cranr4, and select NR4 slip.

Reporting distributions made to non-residents of Canada 

You have to file the NR4 slips and summary:

• on or before March 31 of the year after you made the distribution or bought the interest
• within 90 days after the end of the trust's tax year, or
• within 30 days after the end of the business or activity if you discontinue your business

For more information on completing the NR4 slips and summary, see canada.ca/cranr4, and select NR4 slip.

Transferring amounts between RCA trusts

Under subsection 207.6(7), you do not have to pay tax under Part I of the Act when you transfer a lump-sum amount directly from one RCA trust (the transferring plan) to another RCA trust (the receiving plan).

If you transferred funds to another RCA trust, you must send to the CRA, a copy of the letter of agreement between the two RCA trusts showing the following information:

• the name, complete address, and social insurance number of each member whose funds were transferred
• the transferring RCA trust's full name, complete address, and custodian's trust account number
• the receiving RCA trust's full name, complete address, and custodian's trust account number
• the amount transferred, supported by a letter to the CRA requesting that the transfer be made

This letter will authorize the CRA to transfer the related refundable tax on hand from the transferring plan's account to the receiving plan's account.

If you received funds from another RCA trust, the CRA must receive a copy of the letter of agreement between the two RCA trusts showing the information in the list above. When you file your T3-RCA tax return, send a copy of the letter of agreement to the CRA. This will authorize the CRA to transfer the related refundable tax on hand to your RCA trust’s account.

This transfer of funds does not apply if the receiving plan has a non-resident custodian or is a foreign plan that, under subsection 207.6(5) is considered to be an RCA for Canadian residents participating in the plan.

Penalties and interest

An employer, a custodian, or a person who bought an interest in an RCA has to meet the terms of the withholding, remitting, and filing requirements. If they do not, the CRA will apply penalties.

Penalties for not complying with filing requirements 

Employer, custodian, or person who bought an interest in an RCA 

If you do not meet the filing requirements, you may be prosecuted. If convicted, you could be fined from $100 to $2,500. These penalties apply unless another provision of the Act sets out a different penalty for not complying.

Penalties for not withholding tax  

Refundable tax on contributions

Employer

If an employer does not withhold the 50% refundable tax on contributions made to a custodian, the employer must remit to the CRA, the same amount they contributed to the custodian. The employer can deduct this amount when they calculate their business income. This amount is considered a payment on account of refundable tax.

Income tax on distributions 

Custodian or person who bought an interest in an RCA 

If you are a custodian who made distributions out of an RCA trust or a person who made a payment to buy an interest in an RCA trust,  you have to withhold tax from those payments. If you do not deduct or withhold the required tax from these payments (including payments made to non-residents), the CRA will charge you a penalty. The penalty for not deducting or withholding the required tax is:

• 10% of the amount that you should have withheld, or
• 20% of the amount that you should have withheld if:
  • the CRA already charged you a penalty during the year for not withholding the required tax on distributions, and 
  • you knowingly or under circumstances amounting to gross negligence did not withhold the second time.

Interest 

Employer, custodian, or person who bought an interest in an RCA 

If you do not pay an amount, the CRA will apply interest from the day your payment was due. The interest rate the CRA uses may change every three months, based on prescribed interest rates. Interest is compounded daily. The CRA also applies interest to unpaid penalties. For the prescribed interest rates, go to Prescribed interest rates.

Penalties for not remitting the withholding tax or remitting it late

Employer, custodian, or person who bought an interest in an RCA

The CRA assesses a penalty on the amount you did not remit when:

• you deduct the amounts, but do not remit them 
• the CRA receives the amounts you deducted after the due date

If the remittance due date is a Saturday, a Sunday, or a public holiday, your remittance is due on the next business day.

The penalty for remitting late is:

• 3% if the amount is one to three days late
• 5% if it is four or five days late
• 7% if it is six or seven days late
• 10% if it is more than seven days late, or if no amount is remitted

Generally, the CRA applies this penalty to the part of the amount you did not remit that is more than $500. However, in certain circumstances, the CRA may apply the penalty to the total amount.

If the CRA already charged you this penalty once in a calendar year, the CRA will assess you a 20% penalty on any further times if you knowingly or under circumstances of gross negligence did not remit the withholding tax.

Penalties for not remitting the refundable tax or remitting it late 

Employer, custodian, or person who bought an interest in an RCA 

You may have to remit refundable tax in a year. The CRA will assess a penalty if the CRA receives the amount after the due date.

The CRA calculates the penalty for remitting the refundable tax late, or for not remitting it when required as follows:

• 3% if the amount is one to three days late
• 5% if it is four or five days late
• 7% if it is six or seven days late
• 10% if it is more than seven days late

Generally, the CRA applies this penalty only to the part of the amount you did not remit that is more than $500. However, in certain circumstances, the CRA may apply the penalty to the total amount.

If the CRA already charged you this penalty in the calendar year, the CRA will assess you a 20% penalty on any further times if you knowingly or under circumstances of gross negligence did not remit the refundable tax.

Penalty for filing a return late 

Custodian

Failure to file a return of income

If the custodian files a T3-RCA tax return late, a penalty applies.

The penalty is:

• 5% of the unpaid tax owing on the filing deadline

        plus

• 1% of this unpaid tax for each complete month that the tax return is late, up to a maximum of 12 months

Repeated failure to file a return of income

The CRA will charge an even larger penalty if:

• the custodian repeatedly files the T3-RCA tax return late, and
• the CRA has already charged the custodian a late-filing penalty in any of the previous three tax years

In this case, the penalty is:

• 10% of the unpaid tax when the tax return was due,

        plus

• 2% of this unpaid tax for each complete month the tax return is late, up to a maximum of 20 months.

Employer, custodian, or person who bought an interest in an RCA, or an employer who made contributions to a custodian of an RCA trust 

Failure to file slips and summary 

You need to file the T4A-RCA and the T737-RCA slips and summary on or before the last day of February following the calendar year to which they apply.

If you file the slips and summary late, the minimum penalty is $100 and the maximum penalty is $7,500.

Cancel or waive penalties or interest 

The CRA administers legislation, commonly called taxpayer relief provisions, that allows the CRA discretion to cancel or waive penalties or interest when taxpayers cannot meet their tax obligations due to circumstances beyond their control. 

The CRA’s discretion to grant relief is limited to any period that ends within 10 calendar years before the year in which a relief request is made. 

For penalties, the CRA will consider your request only if it relates to a tax year or fiscal period ending in any of the 10 calendar years before the year in which you make your request. For example, your request made in 2023 must relate to a penalty for a tax year or fiscal period ending in 2013 or later. 

For interest on a balance owing for any tax year or fiscal period, the CRA will consider only the amounts that accrued during the 10 calendar years before the year in which you make your request. For example, your request made in 2023 must relate to interest that accrued in 2013 or later. 

To make a request, fill out Form RC4288, Request for Taxpayer Relief – Cancel or Waive Penalties or Interest. For more information about relief from penalties or interest and how to submit your request, go to Taxpayer relief provisions.  

Failure to provide a social insurance number (SIN) or other information 

Employer, custodian, or person who bought an interest in an RCA 

The CRA can charge you a penalty if you are missing information on a tax or information return. You have to make a reasonable effort to get the necessary information to complete the tax or information return.

The CRA may charge you a $100 penalty each time you omit a SIN on an information slip unless you made a reasonable effort to get the SIN. The CRA will not charge this penalty if the individual applied for a SIN but did not receive it before you filed the information return.

If you are preparing an information slip for an individual and you ask them for their SIN, they must give it to you . They may be charged a penalty of $100 for each time you ask and they do not comply.

An individual who does not have a SIN has to apply for one at any Service Canada Centre within 15 days of your request. When the individual receives their SIN, they have 15 days to give it to you.

A person younger than 18 at the end of the tax year does not need a SIN if their total income for the year is $2,500 or less.

For more information, see Information Circular IC82-2R, Social Insurance Number Legislation that Relates to the Preparation of Information Slips.

Use of the SIN 

Employer, custodian, or person who bought an interest in an RCA  

When you prepare a tax or information return, you can only use, communicate, or let someone else communicate an individual's SIN for the reason the individual provided it for. You cannot use or communicate their SIN for any other reason unless you are required or authorized by law. If you do, you are guilty of an offence and can be fined up to $5,000 or imprisoned for up to 12 months, or both.

Appendix 1 – Person who bought an interest in an RCA

A person who buys an interest in an RCA has many of the same responsibilities that a custodian does. The following rules apply if a you bought an interest in an RCA: 

Appendix 2 – More topics