Tax payable on use of property as security

The tax payable for use of property as security is repealed effective after March 22, 2017.

Amount of tax payable

The amount of tax payable is equal to the FMV of the property when the property started being used as security.

Exceptions

The advantage rules will not apply to benefits related to a swap transaction if the transaction:

  • after 2021, in relation to a swap transaction undertaken to remove a property from an RDSP if it is reasonable to conclude that tax would be payable under Part XI.01 of the Act if the property were retained in the RDSP
  • after 2027, in relation to a swap transaction undertaken to remove a transitional prohibited property from an RDSP if it is reasonable to conclude that tax would be payable under Part XI.01 of the Act if the property were retained in the RDSP
  • in any other case, after June 2017

Note

A swap transaction is any transfer of property between a registered plan and its annuitant or holder (or a non-arm’s length person), subject to certain exceptions. A swap transaction does not include contributions to, and withdrawals from, a registered plan if the advantage is extended by the issuer of an RDSP, or a person with whom the issuer is not dealing at arm’s length, the issuer, and not the holder of the RDSP, is liable to pay the tax resulting from the advantage.

The RDSP issuer must file Form RC298, Advantage Tax Return for RRSP, TFSA, RDSP, or RESP issuers or RRIF carriers, with a payment for any balance due no later than June 30 of the year following the end of the calendar year.

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