Tax payable on an advantage

The 100% tax on advantages generally applies to transactions occurring, income earned and capital gains.

If the annuitant or a person not dealing at arm's length with the annuitant (including the annuitant's RRSP or RRIF) was provided with an advantage in relation to their RRSP or RRIF during the year, a tax is payable which is:

• in the case of a benefit, the fair market value (FMV) of the benefit
• in the case of a loan or a debt, the amount of the loan or debt
• in the case of an RRSP strip, the amount of the RRSP strip

The tax is payable by the RRSP or RRIF annuitant, unless the advantage is extended by the financial institution, in which case it is payable by the financial institution.

An annuitant subject to this tax is required to file Form RC339, Individual Return for Certain Taxes for RRSPs, RRIFs, RESPs or RDSPs. The return must be filed no later than June 30 of the following year. Any tax owing must also be paid by that date. For payment remittance options, see Make a payment to the Canada Revenue Agency.

When the advantage is extended by the issuer or carrier of an RRSP or RRIF, the issuer must file form RC298, Advantage Tax Return for RRSP, TFSA, or RDSP issuers, RESP promoters or RRFI carriers. 

Forms and publications

• Form RC339, Individual Return for Certain Taxes for RRSPs, RRIFs, RESPs or RDSPs
• RC298, Advantage Tax Return for RRSP, TFSA, or RDSP issuers, RESP promoters or RRFI carriers