Retirement Compensation Arrangements Guide

T4041(E) Rev. 21

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La version française de cette publication est intitulée Guide des conventions de retraite.

Table of contents

Find out if this guide is for you

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

Find out if you need to read the whole guide

If you bought an interest in an RCA, you do not need to read the whole guide. We have used the triangular symbol to direct you to the information you may need. This symbol appears in the guide as follow:

black triangle: topic to read if you bought an interest in 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, where appropriate, the Income Tax Regulations.

Chapter 1 – 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 and of the following:

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 as listed above. In this case, we consider this interest to be the property of an RCA and the employer to be the custodian of the RCA.

In most situations, there is one single RCA trust under any particular RCA. Therefore, for simplicity of presentation, the information in this guide contemplates such situations. On the other hand, there could be situations where there is more than one RCA trust under a particular RCA. With regard to such situations, the information in this guide should be read with necessary modifications to correspond with the Income Tax Act and the Income Tax Regulations. Contact the CRA at 1-800-959-8281 for assistance on how to complete the T3-RCA and on the application of other employer and custodian responsibilities described in Chapters 2 and 3.

Refundable tax

The contributions made by the employer to the custodian are taxable under Part XI.3 of the Act. The withholding tax under Reg. 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 remits this tax to us and we refund it 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 the RCA trust in the year. When filing the tax return, the custodian ensures that the correct amount of refundable tax has been sent to us or has been refunded to the RCA trust.

Distributions

All distributions out of 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 it is received.

Annuity contract

When the custodian of an RCA buys an annuity contract to be held by the beneficiary as the legal owner, we consider 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.

Chapter 2 – Employer responsibilities

This chapter covers the following employer responsibilities:

Applying for RC and T accounts

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

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

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

You have to enter the following information on Form T733:

Employer's language of correspondence

Tick (✓) the appropriate box.

Custodian's language of correspondence

Tick (✓) the appropriate box.

Line 1 – Employer's legal name

Enter the employer's legal name. The employer may operate under a different name; however, we need the legal name, not the operating name (do not use more than 60 characters). The employer's legal name will be modified to meet our requirements if it is longer than 60 characters.

Line 2 – Employer's address

Enter the employer's complete address.

Line 3 – Name and telephone number of employer's representative

Enter the name and telephone number of the person we can contact if we need more information about the RCA. The appropriate representative is usually the employer's controller or payroll clerk, not the accounting firm that prepares the financial information.

Line 4 RCA trust's name

Enter the full name of the RCA trust (do not use more than 60 characters). The same name must be used on all returns and correspondence when referring to the trust. The name of the trust will be modified to meet our requirements if it is longer than 60 characters.

Line 5 – Custodian's name and telephone number

Enter the full name and telephone number of the custodian for the RCA trust. The custodian is often a trust company or other financial institution.

Line 6 – Custodian's address

Enter the custodian's complete address.

Line 7 – Name and telephone number of custodian's representative

Enter the name and telephone number (including the area code) of the person we can contact if we need more information about the RCA trust.

Line 8 – Date this RCA became effective

Enter the date the RCA became effective.

Line 9 – Contributions already made to the custodian for this RCA trust

If you made contributions to the custodian, list the dates and amounts of those contributions.

Line 10 – Contributions to be made in the year the RCA becomes effective

If you intend to make contributions to the custodian in the year the RCA becomes effective, list the expected dates and amounts of those contributions.

Line 11 – Address for books and records

Tick (✓) the appropriate box. If the address is not the same as the one on line 2 or 6, enter the address where the books and records of the RCA will be kept.

Line 12 – Distributions out of this RCA trust

Tick (✓) the yes or no box, whichever applies, to indicate whether more than one employee will receive distributions from this RCA trust.

Certification

An authorized officer of the employer has to complete and sign this area.

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 Road
Winnipeg MB  R3C 3M2

Keep a photocopy for your records.

Withholding and remitting the refundable tax

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

We will also apply a penalty if the employer fails to comply with withholding requirements. For more information, see Consequences for failing to comply with withholding, remitting, or filing requirements.

black triangle: topic to read if you bought an interest in an RCA

If an employer made payments to acquire an interest in a life insurance policy that we consider to be an RCA, the employer has to remit to us 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:

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 us, we 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 us and prepare the T737-RCA slips and summary to report the amounts you contribute to the other RCA trust.

Remitting the refundable tax

We have 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 and interest for remitting late or failing to remit the refundable tax.

black triangle: topic to read if you bought an interest in an RCA

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 are required 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 from our webpage at Forms and publications. It may also be requested by calling 1-800-959-5525.

After we receive this information, we will send you confirmation of your RC employer account number. After we process the payment, we will also 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 T737-RCA 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, attach the documentation outlining the change to the T737-RCA Summary. 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. We will apply a penalty if you file these late. For more information, see Chapter 4 – Penalties and interest. If you did not make any contributions during the year, you do not have to file this T737-RCA slips and 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 single page form and as a PDF fillable version. To get these forms, go to Forms and publications.

Enter the following information on the T737-RCA slip:

Year

Enter the four-digit calendar year for which you are preparing the T737-RCA slip.

Box 18 – Gross contributions by employer under an RCA

Enter the amount of gross contributions under the RCA. This is the total of the net contributions you made to the custodian plus the amount of refundable tax you deducted from the contributions during the year and remitted to us.

Note

Do not include on the T737-RCA slip the contributions an employee made directly to the RCA trust. The custodian will issue a letter to the employee for these contributions.

The amount of contributions you made to the custodian may also include one or more of the following:

As an employer, you may be able to deduct the amount of contributions in box 18 when you calculate income from a business or property.

Notes

We may deny the deduction if the amounts are paid as a series of contributions and refunds of contributions under the RCA.

For example, if the employer makes a contribution to the RCA trust at year-end and the custodian refunds that amount to the employer in the next year, we may deny the deduction if we determine that the amount was contributed to obtain a deduction rather than to provide for retirement distributions.

Box 20 – Net contributions made to the custodian

Enter the amount of net contributions you made to the custodian, or the amount you paid to buy an interest in a life insurance policy that we consider to be an RCA. This amount will equal half of the amount entered in box 18.

Box 22 – Refundable tax deducted

Enter the amount of refundable tax you deducted during the year and remitted, or will remit, to us. This amount will equal the amount entered in box 20.

Custodian's name and address

Enter the custodian's full name and complete address.

Employer's name

Enter the employer's full name.

Box 26 – Employer account number

Enter the RC employer account number we assigned to the employer. Your account number should not appear on the two copies of the T737-RCA slip that you give to the custodian.

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

Enter the following information on the T737-RCA Summary:

Language of correspondence

Tick (✓) the appropriate box.

Year

Enter the four-digit calendar year for which you are preparing the T737-RCA summary.

Employer account number

Enter the RC employer account number we assigned to the employer. You can find this number on Form T901B, Statement of Account.

Employer’s name and address 

Enter the employer's full name and complete address. This name has to be the same as the employer's name on Form T901B.

Has the address changed since the last T737-RCA summary?

Tick (✓) the appropriate box.

Line 88 – Total number of T737-RCA slips filed

Enter the total number of T737-RCA slips filed with this T737-RCA Summary. In most cases, there will only be one slip.

Line 18 – Gross contributions by employer under an RCA

Enter the amount of gross contributions you made to the custodian.

This is the contribution amount before tax deductions and equals the total of the amounts in box 18 of all T737-RCA slips filed with this T737-RCA summary.

Line 20 – Net contributions made to the custodian

Enter the amount of net contributions you made to the custodian. This is the contribution amount after tax deductions and equals the total of the amounts in box 20 of all T737-RCA slips filed with this T737-RCA summary.

Line 22 – Refundable tax deducted

Enter the amount of refundable tax deducted. This equals the total of the amounts in box 22 of all T737-RCA slips filed with this T737-RCA summary.

Line 82 – Remittances

Enter the amount of refundable tax you remitted to us for the year. You can get this amount from your most recent Form T901B, Statement of Account.

Difference

Subtract line 82 from line 22. This is the amount of refundable tax owing or, if the result is negative, it is the amount overpaid.

Line 84 – Overpayment

Enter the amount of refundable tax overpaid, if applicable. Generally, if the difference is $2 or less, you will not receive a refund.

Line 86 – Balance owing

Enter the amount of refundable tax owing, if applicable. Generally, if the difference is $2 or less, you do not have to make a payment.

You will be subject to a penalty for late payment if you have a balance owing. For more information, see Chapter 4 – Penalties and interest.

Line 76 – Contact person

Enter the name of the person we can contact about this summary.

Line 78 – Telephone number

Enter the area code and telephone number of the person we can contact about this summary.

Certification

An authorized officer of the employer has to complete and sign this area.

Distributing the slips and summary

Attach one copy of every T737-RCA slip to 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 Road
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 them on plain white paper. You can also make photocopies to distribute to the custodian. We now accept copies of our forms, not only the original forms that are pre-printed.

Note

You can send the cutodian(s) an electronic copy of the T737-RCA slip(s). However, the custodian(s) has to consent in writing (in a letter or by email) to receive the slip(s) electronically.

If you file the T737-RCA slip and summary late or distribute the information slips late, you will be subject to a late-filing penalty. For more information, see Chapter 4 – 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 both registered pension plan contributions and deductible RCA contributions, attach a letter to the employee's copy of the T4 slip showing each amount separately.

See Appendix 2, for more information on the deductibility of RCA contributions.

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 Road
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, we require 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), we require 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.

Chapter 3 – Custodian responsibilities

This chapter discusses the following custodian responsibilities:

Note 

A person who bought another person's interest in an RCA has to undertake many of the same responsibilities that a custodian does. Appendix 1 addresses those responsibilities and directs the buyer to the applicable areas of this chapter.

Receiving employee contributions

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

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.

Amounts received that were withheld from income by the employer

If you receive a contribution for an employee that was withheld from income by the employer, you have to send a letter of acknowledgement to the employee. The letter must also tell the employee 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 the 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 amount of the contribution and remit the refundable tax to us. 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 withheld and remitted to us.

Amounts received directly from an RCA member (employee)

If you receive a contribution directly from an employee, send a letter of acknowledgement to the employee. The letter must also tell the employee 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 the return.

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

Contributions made directly to the RCA trust by an employee will not have refundable tax withheld. However, the custodian of the RCA trust can remit the refundable tax based on all contributions made directly by the employee, using the remittance voucher on Form T901B, Statement of Account. The T901B is available only in personalized, pre-printed format and we will issue the T901B after we process your first payment. The refundable tax under Part XI.3 for employee contributions is then calculated on the annual T3-RCA return.

Filing a 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. An RCA trust is a trust and, as such, its tax year is the calendar year. We will apply a penalty if you file this return late. For more information, see Chapter 4 – Penalties and interest.

Note

If the employer submitted the RCA for registration under the Act as a registered pension plan (RPP) and we refused to register the arrangement as an RPP, the T3-RCA tax return is due 90 days after the date of the final determination or 90 days after the trust's tax year, whichever is later. Submit a copy of the denial letter you received from the Registered Plans Directorate when you file the T3-RCA tax return. Doing so may help avoid a late filing penalty.

Tax on RCA advantages and prohibited investments

A custodian of an RCA is subject to tax under ITA 207.62 where an “advantage” as defined under 207.5(1), is obtained in relation to an RCA.

A custodian of an RCA is also subject to tax under 207.61 where an RCA has a “prohibited investment” as defined under 207.5(1).

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

Waiver or cancellation of tax

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

Completing the T3-RCA tax return

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

RCA trust's tax year

Enter the four digits of the RCA trust's tax year for which you are filing this tax return.

Is this the first T3-RCA tax return filed?

Tick (✓) the yes or no box, whichever applies. If yes attach a copy of the trust agreement if it was not already submitted.

Is this the final return of the RCA trust?

Tick (✓) the yes or no box, whichever applies. If the tax return is the final return for the RCA trust, attach an extra sheet to explain the reason for closure.

Language of correspondence

Tick (✓) the appropriate box.

RCA trust's name

Enter the full name of the RCA trust. Use the same name on all returns and correspondence for the trust. The name of the trust will be modified to meet our requirements if it is longer than 60 characters.

Custodian trust account number

Enter the T custodian trust account number we assigned to the custodian.

Custodian information

Enter the custodian's full name. The custodian can be an individual or a non-individual. Choose only one of the two options and fill in the required information about the custodian.

Area code and telephone number

Enter the area code and telephone number where we can contact the custodian about this tax return. If the custodian is a non-individual, enter the area code and telephone number of the contact person.

Custodian's address

Enter the custodian's complete address. If the custodian is a non-individual, enter the complete address of the contact person.

Mailing address (if different)

Enter the custodian's mailing address if it is different than the custodian's address. We may modify part of your address to meet Canada Post’s requirements. Therefore, the address on any cheques or correspondence we send you may be different from the one you indicate on the trust’s return. If you include the name and mailing address of a contact person, we will send any cheques or correspondence for the trust in care of that person.

Step 1 – Supporting documentation

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 attach the applicable documents to the T3-RCA tax return, as indicated.

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

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

Step 2 – Details of contributions received during the year

Note

If you do not complete Step 2, we cannot process your return.

Part 1 – Amounts received from employer

Give details for each contribution received from an employer during the year. If there is not enough space, attach a separate list. Attach copy 2 of the T737-RCA slips to support the amount on line 1.

If the custodian of this RCA trust is a non-resident or if this arrangement is a foreign plan considered under subsection 207.6(5) to be an RCA for Canadian residents participating in the plan, give details of any lump-sum amounts that have been transferred from another RCA trust to this RCA trust.

Part 2 – Amounts received directly from an RCA member

Give details of all amounts received directly from an RCA member. If there is not enough space, attach a separate list.

Part 3 – Amounts transferred directly from another RCA trust

If funds have been transferred directly from another RCA trust (the transferring plan) to this RCA trust (the receiving plan), and the receiving plan does not have a non-resident custodian and is not a foreign plan that is considered by subsection 207.6(5) to be an RCA for Canadian residents participating in the plan, include in Part 3 any lump-sum amounts transferred directly to the receiving plan. For more information, see Transferring amounts between RCA trusts.

Note

If the custodian of this RCA trust is a non-resident, or if this arrangement is a foreign plan that is considered by subsection 207.6(5) to be an RCA for Canadian residents participating in the plan, do not include the transfer in Part 3. Instead, enter this amount as an employer contribution in Part 1.

If there is not enough space to record all amounts transferred, attach a separate list. Attach a copy of the letter of agreement between the two RCA trusts to the T3-RCA tax return. This letter will authorize us to make the transfer of the related refundable tax on hand to your RCA trust's account.

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

Part 1 – Refundable tax on hand before distributions or election

Complete lines 1 to 18, as they apply.

Line 1 Refundable tax on total contributions at the beginning of the year. You can get this amount from line 6 of Step 3, of the prior year's tax return.

Line 2 Current year's employer contributions. You can get this amount from line 1 of Step 2.

Line 3 Current year's member contributions. You can get this amount from line 2 of Step 2.

Line 4 Current year's amount transferred from another RCA trust. You can get this amount from line 3 of Step 2.

Line 6 Refundable tax on total contributions. Multiply line 5 by 50% to determine the amount of refundable tax.

Line 7 Refundable tax on total contributions at the end of the year. Add the amounts on lines 1 and 6.

Line  8 Income and capital gains at the beginning of the year. You can get this amount from line 10 of Step 3, of the prior year's tax return.

Line 9 Current year's income from business and property. Enter the RCA trust's income for the year from business and property. Do not include the dividend gross-up amount calculated under paragraph 82(1)(b). Attach financial statements for the business or property of the T3-RCA tax return.

Line 10 Current year's capital gains. Enter the RCA trust's capital gains for the year and attach financial statements for the capital gains of the T3-RCA tax return.

Line 11 Total income and capital gains. Add lines 8 to 10.

Line 12 Losses and capital losses at the beginning of the year. You can get this amount from line 14 of Step 3, of the prior year's tax return.

Line 13 Current year's losses from business and property. Enter the RCA trust's losses for the year from business and property. Attach financial statements for the business and property of the T3-RCA tax return.

Line 14 Current year's capital losses. Enter the RCA trust's capital losses for the year. Attach financial statements supporting the capital loss of the T3-RCA tax return.

Line 15 Total losses and capital losses. Add lines 12 to 14.

Line 16 Excess of income and capital gains over losses and capital losses. Subtract the amount on line 15 from the amount on line 11. If this amount is negative, enter "0".

Line 17 Refundable tax on excess of income and capital gains over losses and capital losses. Multiply the amount on line 16 by 50% to determine the amount of refundable tax you have to enter on line 17.

Line 18 Refundable tax on hand before distributions or election. Add the amounts on lines 7 and 17. Transfer this amount to line 25 of Part 3.

Part 2 – Distributions

You need to complete Part 2 if, while the arrangement was an RCA, you made distributions, returned amounts to the employer, or transferred amounts to another RCA.

Section 207.65 provides a rule for the calculation of “refundable tax” of an RCA in circumstances where the custodian of an RCA has a liability to pay a tax on prohibited investments under section 207.61 or tax on advantages under section 207.62. The payment of these taxes out of property of the RCA is deemed to be a distribution from the RCA.

Line 19 Distributions at the beginning of the year. You can get this amount from line 22 of Step 3 of the prior year's tax return.

Line 20 Current year's distributions out of the RCA trust. Include on line 20 any funds you distributed out of the RCA trust to a beneficiary throughout the year. Do not include on line 20 amounts transferred to another RCA or amounts returned to the employer. Attach a copy of the T4A-RCA Summary or NR4 Summary.

Line 21 Current year's amounts returned to employer or employee to be included in employer's or employee's income. Include on line 21 any amounts you returned to the employer or employee. Attach a copy of the T4A-RCA Summary or NR4 Summary.

If you transferred funds to another RCA trust and the custodian of the other RCA trust is a non-resident, or if the other arrangement is a foreign plan considered under subsection 207.6(5) to be an RCA for Canadian residents participating in the plan, include the transfers on line 20 as amounts returned to the employer.

Line 22 Current year's amounts transferred directly to another RCA trust. If you transferred funds directly from this RCA trust (the transferring plan) to another RCA trust (the receiving plan) and the receiving plan does not have a non-resident custodian and is not a foreign plan that is considered by subsection 207.6(5) to be an RCA for Canadian residents participating in the plan, include on line 22 any lump-sum amounts transferred directly to the receiving plan. You have to multiply this amount by 2 because, under the letter of agreement, we will transfer the same amount of refundable tax from the transferring plan to the receiving plan. For more information, see Transferring amounts between RCA trusts.

Line 23 – Taxes on prohibited investments and advantages paid in the current year, to the extent that these taxes have not been waived, refunded or cancelled (distribution under section 207.65). Enter the current year's taxes on a prohibited investment or an advantage paid in the current year and distributed under section 207.65. To the extent that these taxes have been waived, refunded, or cancelled, they are not included at line 23.

Note

If the tax on a prohibited investment reported in a year is refunded (or waived) in a subsequent tax year, it will be necessary for the custodian to make an adjustment to the prior year’s return amending taxes and distributions as required.

Line 24 Total distributions. Add lines 19 to 23. Transfer this amount to line 26 of Part 3.

Part 3 – Refundable tax on hand (after distributions) at the end of the tax year

Option A – Election under subsection 207.5(2):
If you are electing under subsection 207.5(2), you may not have to complete Part 3. See Step 4 – Election under subsection 207.5(2) to recover refundable tax on hand for information on when you may make this election.

If you are closing the RCA and have distributed all of the property held by the RCA such that no property remains in the RCA at the end of the year (other than the right to receive a refund of the refundable tax), you should complete Option B to recover all the refundable tax on hand.

Option B – Complete this option if, during the tax year, all of the following apply:

In this case, enter the amount from line 28 on line 29 and enter on line 30 the amount that you will distribute when you receive the current year refund. To support the amount on line 30, attach a copy of the T4A-RCA Summary and/or the NR4 Summary for the next tax year to the T3-RCA tax return.

Complete the calculations on lines 31 to 32.

If the amount on line 32 is a positive amount, you must either use Option A if available (complete and sign the election in Step 4) or follow Option C to recover a refund of all the refundable tax on hand held for this RCA.

If the amount on line 32 is “0,” transfer “0” to line 39 of Step 5 of the tax return. You do not have to complete the election in Step 4.

Option C – If you are not following Option A to elect under subsection 207.5(2), and Option B does not apply (or the amount on line 32 is positive and you are not electing under option A), follow Option C. Complete the calculation on lines 25 to 28 to determine the amount of refundable tax on hand (after distributions) at the end of the tax year, and transfer the amount on line 28 to line 39 of Step 5.

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, we will not refund any amount.

If there are not enough spaces for all the debt obligations on lines 34 and 35 attach a separate list. If you enter amounts for debt obligations or shares listed on a designated stock exchange (on line 37), attach details of the amounts to the T3-RCA tax return.

Note

You can make this election only if all of the property in the RCA trust at the end of the tax year (other than a right to claim a refund under subsections 164(1) or 207.7(2)) consists of cash, debt obligations, shares listed on a designated stock exchange, or any combination of these. Note that units in a mutual fund trust or shares in a mutual fund corporation that are not listed on a designated stock exchange do not qualify for the purposes of the election under subsection 207.5(2). The election is generally not available if any part of the decline in value of the property is attributable to a prohibited investment or advantage.

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

Line 33 – Cash. Enter the amount of cash of the RCA trust at the end of the tax year.

Line 34 – Debt obligations: Principal amounts. Enter the principal amount of debt obligations outstanding at the end of the tax year.

Line 35 – Debt obligations: Fair market values (FMV). Enter the FMV of debt obligations outstanding at the end of the tax year.

Line 36 – Enter line 34 or 35, whichever is more. Enter at line 36 either the principal amount of debt obligations entered at line 34 or the FMV entered at line 35, whichever is the greater amount.

Line 37 – Fair market value of shares listed on a designated stock exchange. Enter the FMV of shares of the RCA at the end of the tax year.

Line 38 – Total property of the RCA trust at the end of the tax year. Add lines 33, 36 and 37. The result is the amount of the total property of the RCA trust at the end of the tax year. This amount is used to calculate Part XI.3 tax payable or refundable. Transfer this amount to line 39.

Step 5 – Part XI.3 tax payable or refundable

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

Line 39 – Refundable tax on hand at the end of the tax year (line 28 or 32, or line 38, whichever one applies). The amount at line 39 is the refundable tax on hand at the end of the tax year.

Line 40 – Refundable tax on hand at the beginning of the year. Enter the amount of refundable tax on hand at the beginning of the tax year. This amount can be found at line 39.

Line 41 – Refundable tax on hand transferred during the year to another RCA. Enter the amount of refundable tax on hand transferred during the year to another RCA.

Line 42 – Refundable tax on hand transferred during the year from another RCA. Enter the amount of refundable tax on hand transferred during the year from another RCA.

Line 43 – Enter the amount of line 40 minus line 41 plus line 42. 

Line 44 – Subtotal: Total Part XI.3 tax payable or refundable in the year. Enter the amount of line 39 minus line 43. This subtotal is the amount of Part XI.3 tax payable or refundable in the year. If the amount is negative, enclose it in brackets.

Step 6 – Tax on advantages and prohibited investments

You need to complete Step 6 if the RCA owes tax on prohibited investments under section 207.61 or advantages under section 207.62.

Line 45 – Tax under section 207.61 on prohibited investments. Enter the amount of tax on prohibited investments. The amount of tax payable for property described in subsection 207.61(1) is 50% of the fair market value (FMV) of the property.

Line 46 – Tax under section 207.62 on advantages. Enter the amount of tax on advantages. The amount of tax payable for an advantage described in 207.62(1) is the FMV of a benefit, the amount of a loan or indebtedness, and in the case of an RCA strip, the amount of the RCA strip.

Line 47 – Minus refund of the tax on prohibited investments. Subtract the refund of the tax on prohibited investments that have not been waived or cancelled.

In order to claim a refund, you must attach the following supporting documents to the T3-RCA return:

The documents must contain:

If you disposed of a prohibited investment reported at line 45 of Step 6, you may be entitled to a refund of taxes paid if any of the following applies:

However, no refund will be issued if it is reasonable to expect that the custodian, or a specified beneficiary of the arrangement, knew, or should have known, at the time the property was acquired by the RCA trust, that the property was, or would become a prohibited investment.

If you disposed of a prohibited investment reported at line 45 of Step 6 in the same calendar (taxation) year that prohibited investment was acquired then remittance of the tax is not required. However, remittance of the tax is required if it is reasonable to expect that the custodian or specified beneficiary of the arrangement knew, or should have known, at the time the property was acquired by the RCA trust, that the property was, or would become a prohibited investment.                                                                                                              

Line 48 – Subtotal: Refund or balance owing. Enter the amount of line 45 plus line 46 minus line 47.

Step 7 – Refundable tax remitted

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

Line 49 – Refundable tax deducted and remitted by employer or contributor during the year. Enter the amount of refundable tax deducted and remitted by the employer or contributor during the tax year.

Line 50 – Payments on account remitted by custodian during the year. Enter the amount of payments on account remitted by the RCA custodian during the tax year.

Line 51 – Subtotal. Enter the amount of line 49 plus line 50.

Step 8 – Refund or balance owing

Complete Step 8 to determine your refund or balance owing.

Line 52  Enter the amount of line 44 plus line 48 minus line 51. If the amount on line 52 is positive, you have a balance owing. If the amount on line 52 is negative, you have a refund.

You have to send your payment for any tax owing along with the completed T3-RCA tax return. The amount shown on line 52 is due no later than 90 days after the end of the RCA trust's tax year for which you are filing the tax return. You will have to pay a penalty for late payment if you have a balance owing. For more information, see Penalty for filing a return late.

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Line 53 – Enter the amount of the payment you are sending the CRA with your tax return.

Make your cheque payable to the Receiver General for Canada and write your name, the T custodian trust account number, and “Form T3-RCA” on the front of your payment.

Line 54 – Refund code If the trust is entitled to a refund, enter one of the following codes at line 54:

0  if you want us to refund the credit

1  if you want us to keep the credit for next year

2  if you want us to hold the credit and apply it to an expected assessment of an additional amount to be paid. Attach a letter providing details

We consider the credit to have been received on the date we assess your return. First, we will apply a credit to any outstanding balance. Then, we will direct any amount left over according to the code you enter. If you do not enter a code, we will refund the credit.

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.

Note

You do not have to submit any other supporting documentation when filing online. Keep all supporting documentation used to prepare a return, such as, books, records, forms, schedules, and receipts for six years from the end of the last taxation year to which they relate. Be ready to send this documentation to the Canada Revenue Agency on request.

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 Road
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 us, do not file another return for that tax year. Send us a completed

Form T3-ADJ, T3 Adjustment Request, or a letter providing the details of the change.

Keep a photocopy for your records.

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

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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). We use this form to open two accounts:

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

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

Note 

A person who bought an interest in an RCA should complete sections A and C and the certification area of Form T735.

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Section A 

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If you are a custodian, to whom will you make distributions out of the RCA trust?

Tick (✓) the appropriate box.

If you bought an interest in an RCA, from whom did you buy the interest? 

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Tick (✓) the appropriate box.

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

Section B – Custodian

Line 1 RCA trust's name

Enter the full name of the RCA trust.

Custodian trust account number

Enter the T custodian trust account number we assigned to the custodian.

Line 2 – Custodian's name

Enter the custodian's full name.

Line 3 – Custodian's address

Enter the custodian's complete address.

Line 4 – Name and telephone number of custodian's representative

Enter the name of the person we can contact about this application and that person's area code and telephone number.

Line 5 – Address where books and records are kept

Tick (✓) the box if the address is the same as the address on line 3, or enter the address where the books and records of the RCA trust are kept.

Line 6 – If you have made distributions out of the RCA trust

Give the details of distributions as requested in this area. If there is not enough space, attach a separate detailed list.

Line 7 – If you have not made any distributions out of the RCA trust

Give the date when you expect to make distributions.

Language of correspondence

Tick (✓) the appropriate box.

Section C – Person who bought an interest in an RCA 

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

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Line 1 RCA trust's name

Enter the full name of the RCA trust.

Line 2 – Name and telephone number of person who bought an interest in the RCA

Enter the full name of the person who bought an interest in the RCA and the area code and telephone number where we can contact that person about this application.

Line 3 – Address of the person who bought an interest in the RCA

Enter the complete address of the person who bought an interest in the RCA.

Line 4 – Address where books and records are kept

Tick (✓) the box if the address is the same as the address on line 3 or enter the address where the books and records of the RCA trust are kept.

Line 5 – When did you buy the interest in the RCA?

Enter the date you bought the interest in the RCA.

What was the purchase price for the interest in the RCA?

Enter the amount you paid for the interest in the RCA.

Language of correspondence

Tick (✓) the appropriate box.

Certification 

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The custodian's authorized representative or the person who bought an interest in the RCA has to complete and sign this area.

Filing Form T735 

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Send the completed original of Form T735 to:

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

Keep a photocopy for your records.

Note

When you file Form T735, we will send you a PD7A, Remittance Form Voucher – Statement of Account for Current Source Deductions. Following the first PD7A, a new statement will be issued to you every time a payment is made. If no payment is received, a PD7A will not be sent unless requested by you – see the next three subheadings for more information.

Withholding and remitting income tax on distributions 

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Withholding income tax on distributions

As a custodian, you have to withhold income tax on any distributions you make out of the RCA trust to beneficiaries. This applies to periodic payments and lump-sum payments. You usually have to remit this tax no later than the 15th day following the month in which 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 Guide T4001, Employers' Guide – Payroll Deductions and Remittances, and publication T4032, Payroll Deductions Tables.

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

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If you buy an annuity contract for the beneficiary, we consider 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.

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Notes 

If you bought an interest in an RCA from a resident of Canada, you have to withhold tax at a rate of 50% of the purchase price.

If you bought an interest from a non-resident, see Withholding income tax on distributions made to non-residents of Canada.

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You have to file a completed Form T735 to apply for a remittance account number when you are ready to make the first distribution out of the RCA trust to a beneficiary. 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, refer to chapter 9 in Guide T4001, Employers' Guide – Payroll Deductions and Remittances.

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 Road
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:

When we receive this information, we 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 we process the payment, we will send you a receipt and a blank Form PD7A.

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

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

Note 

If you bought an interest in an RCA, you have to file the T4A-RCA slips and summary to report the purchase.

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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) 

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The T4A-RCA slip is available as a single-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 or 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:

Year 

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Enter the four-digit calendar year for which you are preparing the T4A-RCA slip.

Box 12 – Refund to employer

Enter the amount, if any, that the RCA trust refunded to a participating employer which is required to be included in their income under paragraph 12(1)(n.3). Include a transfer of funds from this RCA trust (the transferring plan) to another RCA trust (the receiving plan) if the custodian of the receiving plan is a non-resident, or if the receiving plan is a foreign plan that is considered by subsection 207.6(5) to be an RCA for Canadian residents participating in the plan.

Notes

Do not include in box 12 any transfer of funds made directly from a transferring plan to a receiving plan if the custodian of the receiving plan is not a non-resident and 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.

For more information about transfers between RCA trusts, see Transferring amounts between RCA trusts.

Box 14 – Refund of employee contributions

Enter the amount, if any, that the RCA trust refunded to the employee, including voluntary employee contributions made to the RCA.

Box 16 – Distributions

Enter the amount you paid to the beneficiary as benefits from the RCA trust. Do not include a refund of employee contributions or amounts paid to purchase an interest in the RCA.

Box 17 – Distributions eligible for pension income splitting

Enter the amount included in box 16 consisting of payments made in the year to the individual out of or under an RCA that:

You include this amount in the calculation of the maximum split pension amount on Form T1032, Joint Election to Split Pension Income, if you are age 65 or more at the end of the calendar year and are electing to split your eligible pension income with your spouse or common-law partner.

Box 18 – Selling price of an interest in the RCA

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If you bought an interest in the RCA, enter the amount you paid to the recipient for the interest in the RCA (the purchase recipient price before you withheld 50% tax).

Box 20 – Other amounts 

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Complete box 20 if the RCA trust:

Under subsection 56(11), the amount to include in box 20 is the difference between the consideration and the FMV.

Box 22 – Income tax deducted 

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Enter the amount of income tax deducted from distributions or from the purchase price of the interest, as the case may be.

Box 24 – Social insurance number 

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Enter the recipient's social insurance number.

Recipient's name and address 

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Enter the last name in capital letters, followed by the first name and initial, and the complete address of either the individual who received an amount from the RCA, or of the person who sold an interest in an RCA to another person, as the case may be.

Name of custodian, or person who bought an interest in the RCA  

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Enter the full name of the custodian or the full name of the person who bought an interest in the RCA, as the case may be.

Box 61 – Payroll account number 

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Enter the custodian's payroll account number or the payroll account number of the person who bought an interest in the RCA, as the case may be. The custodian's payroll account number has to be the same as it is on your Form PD7A receipt. The custodian's payroll account number should not appear on the two copies of the T4A-RCA slip that you give to the recipient.

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

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

Year 

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Enter the four-digit calendar year for which you are preparing the T4A-RCA summary.

Payroll account number

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Enter the custodian's payroll account number or the payroll account number of the person who bought an interest in the RCA, as the case may be.

Corresponding custodian trust account number

Enter the corresponding custodian trust account number. This is a nine-character account number beginning with the letter T, followed by eight numbers.

Name and address of custodian, or person who bought an interest in the RCA

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Enter the full name and complete address of the custodian, or the person who bought an interest in the RCA, as the case may be.

Note

The custodian's name and payroll account number have to be the same as on your Form PD7A receipt.

Name of the RCA trust 

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Enter the full name of the RCA trust.

Line 88 – Total number of T4A-RCA slips filed 

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Enter the number of T4A-RCA slips filed with this T4A-RCA Summary.

Line 12 – Refund of employer contributions

Enter the total of all amounts shown in box 12 of all T4A-RCA slips filed with this summary.

Line 14 – Refund of employee contributions

Enter the total of all amounts shown in box 14 of all T4A-RCA slips filed with this summary.

Line 16 – Distributions

Enter the total of all amounts shown in box 16 of all T4A-RCA slips filed with this summary.

Line 17 – Distributions eligible for pension income splitting

Enter the total of all amounts shown in box 17 of all T4A-RCA slips filed with this summary.

Line 18 – Selling price of an interest in the RCA 

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Enter the total of all amounts shown in box 18 of all T4A-RCA slips filed with this summary.

Line 20 – Other amounts 

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Enter the total of all amounts shown in box 20 of all T4A-RCA slips filed with this summary.

Line 22 – Income tax deducted 

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Enter the total of all amounts shown in box 22 of all T4A-RCA slips filed with this summary.

Line 82 – Remittances 

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Enter the total amount of tax you remitted to us. You can get this amount from your most recent Form PD7A receipt.

Difference  

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Subtract line 82 from line 22.

If this amount is positive, there is a balance owing. Enter the result on line 86.

If the amount is negative, there is an overpayment. Enter the result on line 84.

Line 84 – Overpayment 

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Enter the amount of tax overpaid. Generally, if the difference is $2 or less, you will not receive a refund.

Line 86 – Balance owing 

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Enter the amount of tax owing. Generally, if the difference is $2 or less, you do not have to make a payment.

You may be subject to a penalty for late payment if you have a balance owing. For more information, see Chapter 4 – Penalties and interest.

Line 76 – Contact person 

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Enter the name of the person we can contact about this summary.

Line 78 – Telephone number 

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Enter the area code and telephone number of the person we can contact about this summary.

Certification

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An authorized officer of the custodian, or the person who bought an interest in the RCA, has to complete and sign this area.

Distributing the slips and summary 

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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 Road
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 the PDF fillable T4A-RCA slip, you can print them on plain white paper. You can also make photocopies to distribute to the custodian. We now accept copies of our forms, not only the original forms that are pre-printed.

Note

You can send the custodian an electronic copy of their T4A-RCA slips. However, each custodian has to consent in writing (in a letter or by email) to receive the slips electronically.

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 Chapter 4 – Penalties and interest.

Filing the final T4A-RCA slips and summary 

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What should you do if your RCA closes?

Distributions to non-residents of Canada 

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The provisions of Part XIII of the Act impose 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 

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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 provisions of an income tax convention or agreement between Canada and another country may provide for a reduced rate of Part XIII tax on the payments. For more information about non-resident income tax, the treaty countries, and treaty rates, see the following publications:

Note

If you bought an interest in an RCA from a non-resident, you have to withhold income tax at a rate of 25% of the price you paid.

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

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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 no later than the 15th day of the month following the month in which you withheld it. For more information on form NR76 and for remitting the non-resident withholdings, see Guide T4061, NR4 - Non-Resident Tax Withholding, Remitting, and Reporting.

Reporting distributions made to non-residents of Canada 

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If you are a custodian who distributed an amount out of the RCA trust to a non-resident, you have to file the NR4 Summary, Return of Amounts Paid or Credited to Non-residents of Canada, and the NR4 Slip, Statement of Amounts Paid or Credited to Non-residents of Canada.

Note

If you bought an interest in an RCA from a non-resident, you have to file - the NR4 slip and summary to report the purchase.

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You have to file the NR4 slips and summary no later than March 31 following the year you made the distribution or bought the interest, or no later than 90 days after the end of the trust's tax year. If you discontinue your business, you have to file no later than 30 days after the end of the business or activity.

For more information on completing the NR4 slips and summary, see Guide T4061, NR4 – Non-Resident Tax Withholding, Remitting and Reporting.

Transferring amounts between RCA trusts

Subsection 207.6(7) provides that transfers of amounts between RCA trusts are not subject to tax under Part I of the Act if the lump-sum amount is transferred 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 us a copy of the letter of agreement between the two RCA trusts providing the following information:

This letter will authorize us to make the transfer of 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, we must receive a copy of the letter of agreement between the two RCA trusts providing the above information. When you file your T3-RCA tax return, attach a copy of the letter to authorize us to make the transfer of the related refundable tax on hand to your RCA trust's account.

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

Note

The provisions of subsection 207.6(7) do not apply to amounts refunded to the employer that are later transferred to an RCA trust. These amounts are reported in box 12 of a T4A-RCA slip as a refund of employer contributions. For more information, see Completing the T4A-RCA slip, Statement of Distributions from a Retirement Compensation Arrangement (RCA).

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Chapter 4 – Penalties and interest

Consequences for failing to comply with withholding, remitting, or filing requirements  

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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 the employer, custodian, or person who bought an interest in an RCA fails to comply, we will apply penalties.

Penalties for failing to comply with filing requirements 

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Employer, custodian, or person who bought an interest in an RCA 
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If you fail to comply with the filing requirements, you may be prosecuted. If convicted, you could be fined from $100 up to $2,500. These penalties apply except where another provision of the Act sets out a penalty for the failure.

Penalties and interest for failing to withhold tax  

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Refundable tax on contributions

Employer

If an employer does not withhold the 50% refundable tax on contributions made to a custodian, the employer is required to remit to us an amount equal to the amount of the contribution made to the custodian. The amount the employer remits is deductible by the employer when calculating business income and is considered a payment on account of refundable tax.

Income tax on distributions 

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Custodian or person who bought an interest in an RCA 
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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 has to withhold tax from those payments. If the person did not deduct or withhold the required tax from such payments (including payments made to non-residents) they will be subject to a penalty. The penalty for not deducting or withholding the required tax is:

Interest 

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Employer, custodian, or person who bought an interest in an RCA 
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If you fail to pay an amount, we will apply interest from the day your payment was due. The interest rate we use is determined every three months, based on prescribed interest rates. Interest is compounded daily. We also apply interest to unpaid penalties. For the prescribed interest rates, go to Prescribed interest rates.

Penalties and interest for remitting late or failing to remit withholding tax

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

We assess a penalty on the amount you failed to remit when:

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:

Generally, we only apply this penalty to the part of the amount you failed to remit that is more than $500. However, in certain circumstances, we may apply the penalty to the total amount.

If you are subject to this penalty more than once in a calendar year, we will assess a 20% penalty on the second or later failures if they were made knowingly or under circumstances of gross negligence.

Note

We consider a non-sufficient funds payment to be a failure to remit and will automatically apply a penalty, as well as an administrative charge.

Penalties and interest for remitting late or failing to remit the refundable tax 

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

The employer, the custodian and a person who has bought an interest in an RCA may have to remit refundable tax in a year. We assess a penalty up to 20% when we receive the amount you withheld past the due date.

The penalty for remitting the refundable tax late, or for failing to remit the refundable tax as required, is calculated as follows:

If you are subject to this penalty more than once in a calendar year, we will assess a 20% penalty on the second or later failures if they were made knowingly or under circumstances of gross negligence.

Generally, we only apply this penalty to the part of the amount you failed to remit that is more than $500. However, in certain circumstances, we may apply the penalty to the total amount.

We charge compound interest, calculated daily at the prescribed rate, on both the amount that was not remitted on time and on the penalty.

Notes

We will apply a penalty on a non-sufficient funds payment and we will apply penalties for late or deficient remittances on amounts of more than $500. This $500 threshold does not apply:

  • to remittances required under Part XIII of the Act (non-residents), or
  • if the person who is required to remit such an amount knowingly or under circumstances amounting to gross negligence delayed remitting or remitted less than the required amount

Penalty for filing a return late 

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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

We will charge an even larger penalty for repeated failure to file the T3-RCA tax return when we have assessed 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 that 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 

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Failure to file slips and summary 
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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.

The minimum penalty for late filing the T4A-RCA and the T737-RCA slips and summary is $100 and the maximum penalty is $7,500. For the complete penalty structure, go to Penalty for failure to file an information return by the due date.

Cancel or waive penalties or interest 

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The CRA administers legislation, commonly called the 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 ended within 10 calendar years before the year in which a 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 2021 must relate to a penalty for a tax year or fiscal period ending in 2011 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 2021 must relate to interest that accrued in 2011 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 

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Employer, custodian, or person who bought an interest in an RCA 
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We can charge a penalty if information is missing 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.

You may be subject to a $100 penalty each time a SIN is not shown on an information slip unless you have made a reasonable effort to get the SIN. We will not charge this penalty if the individual has applied for a SIN but has not received it when you file the information return.

An individual has to give their SIN, on request, to the person who is preparing an information slip for him or her. The individual is subject to a penalty of $100 for each failure to comply.

An individual who does not have a SIN has to apply for one at any Service Canada Centre no later than 15 days after the request. When the individual receives a SIN, he or she has 15 days to give it to the person preparing the information slip.

A person under the age of 18 years 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 

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

Any person who prepares a tax or information return cannot knowingly use, communicate, or let an individual's SIN be communicated for any reason other than the reason for which the individual provided it, unless it is required or authorized by law.

Tax and information return preparers and their employees, officers, or agents who use an individual's SIN for unauthorized purposes are guilty of an offence and are liable to a fine up to $5,000, imprisonment up to 12 months, or both.

Appendix 1 – Person who bought an interest in an RCA

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

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Appendix 1 – Person who bought an interest in an RCA
Topic Information and references
Responsibilities of a person who bought an interest in an RCA
  • Withholding and remitting tax
  • Filing Form T735 to apply for a remittance account number for tax withheld from the purchase price of an interest in an RCA
  • Filing the T4A-RCA slips and summary to report the purchase of an interest in an RCA
  • Filing the NR4 slips and summary to report payments made to non-residents who sold an interest in an RCA
  • Reporting amounts received from an RCA
Withholding and remitting tax You have to withhold tax at a rate of 50% of the purchase price of the interest in the RCA (25% if you bought the interest from a non-resident). For more information, see Withholding and remitting income tax on distributions black triangle: topic to read if you bought an interest in an RCA on page 15 and Withholding income tax on distributions made to non-residents of Canada black triangle: topic to read if you bought an interest in an RCA on page 19.

You have to send the tax to us no later than the 15th day following the month in which you withheld it. If you do not withhold this tax or if you remit the tax late, we will apply penalties. For more information about the penalties, see Penalties and interest for failing to withhold tax black triangle: topic to read if you bought an interest in an RCA.
Applying for a remittance account number for tax withheld Complete Form T735 to apply for a remittance account number for tax withheld for an RCA. For more information, see Completing Form T735, Application for a Remittance Number for Tax Withheld from a Retirement Compensation Arrangement (RCA) black triangle: topic to read if you bought an interest in an RCA.
Filing the T4A-RCA slips and summary to report the purchase of an interest in an RCA You have to file the T4A-RCA slips and summary to report the purchase and to provide the seller with a tax information slip.  For more information, see Filing T4A-RCA slips and summary to report distributions made out of an RCA trust black triangle: topic to read if you bought an interest in an RCA.

You have to file the slips and summary no later than the last day of February after the year when you bought the interest.
Filing the T4A-RCA slips and summary to report distributions made out of an RCA For details on how to complete the T4A-RCA slip, see Completing the T4A-RCA slip, Statement of Distributions from a Retirement Compensation Arrangement (RCA) black triangle: topic to read if you bought an interest in an RCA and Completing the T4A-RCA Summary of Distributions from a Retirement Compensation Arrangement (RCA) black triangle: topic to read if you bought an interest in an RCA.

If you file the summary late, we will apply the late-filing penalties discussed in Penalties and interest for remitting late or failing to remit the refundable tax black triangle: topic to read if you bought an interest in an RCA.
Filing the NR4 slips and summary to report payments made to non-residents If you bought an interest in an RCA from a non-resident, you have to file the NR4 slips and NR4 summary.

For more information, see Reporting distributions made to non-residents of Canada.

You have to file the slips and summary no later than March 31 following the year you bought the interest, or no later than 90 days after the end of the trust's tax year.
Failure to comply We will apply penalties if you fail to withhold or remit tax, file any of the slips and summary late or remit the tax late. See Chapter 4 – Penalties and interest for more information.
Reporting amounts received from an RCA trust You have to report amounts you received from the RCA trust. The custodian of the RCA trust will send you a T4A-RCA slip for any distributions made to you.
Selling an interest in an RCA If you dispose of an interest in an RCA, you have to include the amount you received in your income. The buyer will issue you a T4A-RCA slip for tax purposes. You may be entitled to claim a deduction for amounts received from the disposition of an interest in the RCA. See the instructions under box 18 on the back of the T4A-RCA slip.
Claiming deductions for amounts received from an RCA You may be entitled to claim a deduction for amounts received from an RCA. See "Additional information" on the back of the T4A-RCA slip.

Appendix 2 – Additional topics

Appendix 2 – Additional topics
Topic Information and Income Tax Act references
Amalgamated corporations We consider that an amalgamated corporation has made contributions to any RCA to which contributions were previously made by any of the predecessor corporations. Paragraph 87(2)(j.3)
Are contributions that an employee made to an RCA deductible?

Contributions that an employee made to an RCA are deductible to the extent that they meet the provisions of paragraph 8(1)(m.2).

That paragraph allows an employee to deduct contributions made to a pension plan that is an RCA if:

  • the employee was required under the terms of their employment to contribute the amount and the total amount contributed in the year by the employee is not more than the total amount contributed in the year by the employer (or any other person) for the employee
  • the amount was contributed to a plan that was a registered pension plan but the plan's registration was revoked, and the amount was contributed under the terms of that plan

In both cases, the contributions have to be made to a custodian who is a resident of Canada.

If the contribution the employee made is not deductible under paragraph 8(1)(m.2), the employee may be eligible to deduct an amount in the year he or she receives an amount from the RCA. For more information, see "Additional information" on the back of the T4A-RCA slip.

Definition of an RCA Retirement compensation arrangement (RCA) is defined in subsection 248(1). The definition also covers the circumstances under which we consider an arrangement to be an RCA and includes a list of plans, arrangements, trusts and policies that are excluded from the definition of an RCA.
Definition of an RCA trust RCA trust is defined in subsection 207.5(1) as a trust governed by an RCA. Subsection 207.6(1) provides special rules that apply when an RCA is established without the creation of a trust.
Distribution of property by an RCA trust Rules for the distribution of property by an RCA trust are in section 107.2. Generally, the RCA trust must recognize any gain or loss based on the fair market value (FMV) of any or all of the property when it is distributed. We consider that the RCA trust has made a distribution equal to the FMV of the property and that the recipient has received the property at that FMV.
Employee benefit plan (EBP) We consider that the custodian of an employee benefit plan has made a contribution to an RCA when the employee benefit plan becomes an RCA due to a change of custodian, the custodian stops carrying on business through a fixed place of business in Canada, or if the custodian is no longer licensed or otherwise authorized under the laws of Canada or of a province or territory to offer services as a trustee. Where there is a provision in an EBP for a change of trustees, it is our view that subsection 207.6(4) of the Act does not apply where there is a change of trustees and the new trustee is resident in Canada.

Under subsection 207.6(4), we consider the contribution to be made right after that time and to be equal to the FMV of all the properties of the employee benefit plan. As a result, under section 153, the custodian has to remit to the Receiver General for Canada 50% of the amount that we consider to be a contribution to an RCA. An employer who made non-deductible contributions to the plan while it was an employee benefit plan may also get a deduction under section 32.1 in calculating income for the contribution.

Life insurance policies

Subsection 207.6(2) provides special rules when an interest in a life insurance policy (including an annuity) is acquired to meet an employer's obligation to provide benefits that are received or enjoyed by an employee on, after, or in contemplation of:
  • any substantial change in the services rendered by the employee
  • the retirement of the employee
  • the loss of an office or employment of the employee
Under this subsection, we consider:
  • the person or partnership who acquires the interest in the policy to be the custodian of an RCA
  • the interest in the life insurance policy to be the "subject property" of the arrangement
  • that twice the amount of the premiums paid under the policy, or the repayment of a policy loan, are contributions to the arrangement
  • that payments under the policy, including a policy loan, and refunds of refundable tax are distributions by the arrangement
The person who buys the interest in the policy has to withhold tax from any payment toward the policy, file the required returns, and pay the special refundable tax. The special rules apply when the plan or arrangement is not otherwise considered to be an RCA and is not excluded by any of paragraphs (a) to (l) and (n) under the definition of retirement compensation arrangement in subsection 248(1).
 

Note
The rules in subsection 207.6(2) do not apply to insurance policies held by a beneficiary. Refer to Annuity contract.

Parent corporation We consider that a parent corporation has made contributions to any RCA to which contributions were previously made by any subsidiary wound up into the parent corporation. Paragraph 88(1)(e.2).
Personal services corporation Subsection 207.6(3) provides rules that apply to an incorporated employee when:
  • a personal services corporation or its employee enters into an arrangement with a person or partnership (referred to as the employer) to whom the corporation is providing services
  • benefits are to be provided under the arrangement on, after, for any substantial change in, or for the end of, the services provided to the employer by the corporation or by the corporation's employee
In these circumstances, the following rules apply:
  • an employer-employee relationship is considered to exist between the employer and the personal service corporation
  • the distributions made to a person under the arrangement are considered to be benefits received or enjoyed by that person on, after, or for a substantial change in the services provided by the corporation
In this case, we may consider that the plan or arrangement constitutes an RCA as defined in subsection 248(1), depending on its terms.
Refusal to register a pension plan A pension plan submitted for registration under the Act reverts to its status as an RCA if we refuse to register it as a registered pension plan. Subsection 147.1(3)
Resident's arrangement The definition of an RCA excludes a retirement plan (other than an athlete's plan) kept mainly for the benefit of non-residents for services provided outside Canada. However, special rules apply (except as noted below) if contributions are made to a foreign plan for employees resident in Canada. The foreign plan is considered to be an RCA and any contributions made to it (and the investment income derived from these contributions) are subject to the refundable RCA tax.

Contributions made in respect of an employee who has been resident in Canada for less than 60 of the preceding 72 months are excluded if the employee was a member of the foreign plan before becoming a Canadian resident, or became a plan member by the end of the calendar month following the month in which the employee became a resident.

Appendix 3 – Income Tax Act references

You may find the following references helpful when dealing with RCAs. References are to the Income Tax Act except where the reference follows the letters "Reg.," in which case the reference is to the Income Tax Regulations.

Appendix 3 – Income Tax Act references
Topic Income Tax Act references
Advantage 207.5(1), 207.62(1), (2)
Administration and enforcement 227(4), (5), (8.1), (8.2), (9)
Annuity contract 56(1)(x)
Assessments 152
Deductions from business or property income - Employer 20(1)(r)
Deductions from business or property income - Person who bought an interest in an RCA 60(t)(ii)(B)
Deductions from office or employment income - Employee 8(1)(m.2)
Definitions 248(1), 207.5(1)
Disposition, purchase, or use of an RCA trust's property 56(11)
Distribution of property by an RCA trust - Rules 107.2
Income earned by an RCA trust - Exemption from Part I tax 149(1)(q.1)
Income from a business or property - Employer or person who bought an interest in an RCA 12(1)(n.3), 56(1)(x), (z),
56(11)
Income from a business or property - Person who sold an interest in an RCA 56(1)(y)
Income, Other deductions in computing - Employee 60(j.1), (t), (u)
Income, Other deductions in computing - Employer 60(t), (u)
Income, Other sources of - Employee 56(1)(a), (x), (z), 56(11)
Information returns (slips and summaries) 150(2), (3), Reg. 200(1),
202(2), (7), 205(1), (2)
Life insurance policy to fund benefits 207.6(2)
Payment of tax and interest 153(1)(p), (q), (r), (s),
Reg. 108(1), 158, 160.3, 161(1), (11)
Penalties 162 to 163.1, 227(8.2), 227(9)
Pension income splitting 60.03(1)
Prohibited investment 207.5(1), 207.61
Prosecutions 238(1)
RCA strip  207.5(1), 207.62(2)
Refunds and objections 164 to 167
Returns 207.7(3)
Registered pension plans 147.1(3)
Rights and things for deceased persons 70(2)
Rules for corporations on amalgamation 87(2)(j.3)
Specified beneficiary  207.5(1),207.63
Tax for RCAs 207.7
Tax on income from Canada for non-residents 212(1)(j), 212(13)(c),
214(3)(b.1)
Transfers between RCA trusts 207.6(7)
Waiver or cancellation of tax  207.64 
Withholding tax on contributions to and distributions out of the RCA trust, and on the price paid for an interest in an RCA 153(1), Reg. 103(7),
Reg. 100 to 103 and 108(1)

Index

For more information

If you need help

If you need more information after reading this publication, go to Taxes or call 1-800-959-8281.

Forms and publications

The CRA encourages electronic filing of your return. If you need a paper version of the CRA's forms and publications, go to Forms and publications or call 1-800-959-8281.

Electronic mailing lists

The CRA can notify you by email when new information on a subject of interest to you is available on the website. To subscribe to the electronic mailing lists, go to Canada Revenue Agency electronic mailing lists.

Tax Information Phone Service (TIPS)

For tax information by telephone, use our automated service, TIPS, by calling 1-800-267-6999.

Teletypewriter (TTY) users

If you have a hearing or speech impairment and use a TTY call  1-800-665-0354.

If you use an operator-assisted relay service, call our regular telephone numbers instead of the TTY number. 

Direct deposit

Direct deposit is a fast, convenient, and secure way to get your CRA payments directly into your account at a financial institution in Canada. For more information and ways to enrol, go to Direct deposit.

Complaints and disputes

Service complaints

You can expect to be treated fairly under clear and established rules, and get a high level of service each time you deal with the Canada Revenue Agency (CRA). For more information about the Taxpayer Bill of Rights, go to Taxpayer Bill of Rights.

If you are not satisfied with the service you received:

  1. Try to resolve the matter with the CRA employee you have been dealing with or call the telephone number provided in the CRA’s correspondence. If you do not have contact information, go to Contact information – Canada Revenue Agency.
  2. If you have not been able to resolve your service-related issue, you can ask to discuss the matter with the employee’s supervisor.
  3. File a service complaint by filling out Form RC193, Service feedback. For more information and to learn how to file a complaint, go to Service feedback.

If you are not satisfied with how the CRA has handled your service-related complaint, you can submit a complaint with the Office of the Taxpayers’ Ombudsperson.

Formal disputes (objections and appeals)

If you disagree with an assessment, a determination, or decision, you have the right to file a formal dispute.

For more information about objections and formal disputes, and related deadlines, go to Service feedback, objections, appeals, disputes, and relief measures.

Reprisal complaints

If you have previously submitted a service complaint or requested a formal review of a CRA decision and feel you were not treated impartially by a CRA employee, you can submit a reprisal complaint by filling out Form RC459, Reprisal Complaint.

For more information about complaints and disputes, go to Service feedback, objections, appeals, disputes, and relief measures.

Due dates

When a due date falls on a Saturday, Sunday, or public holiday recognized by the CRA, your return is considered on time if the CRA receives it or if it is postmarked on or before the next business day.

For more information, go to Important dates for corporations.

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