Tax payable on an advantage

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 100% tax is payable, which is:

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

The tax is payable by the annuitant, unless the advantage is extended by the RRSP issuer, RRIF or FHSA carrier, in which case it is payable by the issuer or carrier.

The annuitant subject to this tax must file a Form RC339, Individual Return for Certain Taxes for RRSPs, RRIFs, RESPs or RDSPs to report the tax on advantage and determine the amount of tax payable, with a payment for any balance due, no later than June 30 following the end of the calendar year.

Note

When the advantage is extended by the issuer or carrier of an RRSP or RRIF, the issuer or carrier, and not the annuitant, is liable for the tax. The issuer or carrier must file Form RC298, Advantage Tax Return for RRSP, TFSA, FHSA or RDSP Issuers, RESP Promoters or RRIF carriers, with a payment for any balance due, no later than June 30 following the end of the calendar year.

For more information on an advantage, refer to Income Tax Folio S3-F10-C3, Advantages – RRSPs, RESPs, RRIFs, RDSPs, FHSAs and TFSAs.

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