The Canada Revenue Agency Facilitates the Use by Taxpayers of Tax Measures Proposed in the 2008 Economic and Fiscal Statement OTTAWA, ONTARIO–(Marketwire – Dec. 11, 2008) – The Honourable Jean-Pierre Blackburn, Minister of National Revenue, announced today that the Canada Revenue Agency (CRA) will follow its longstanding practice by facilitating the use by taxpayers of tax measures proposed in the 2008 Economic and Fiscal Statement.
“In light of prorogation of Parliament, many seniors and financial institutions are seeking confirmation that they can act upon the government’s proposal in the 2008 Economic and Fiscal Statement to reduce the registered retirement income fund (RRIF) minimum withdrawal for 2008 by 25 per cent,” said Minister Blackburn. “Accordingly, I want to confirm today that the CRA will allow taxpayers to act upon this measure, which is included in a Notice of Ways and Means Motion tabled on November 28, 2008, in the House of Commons.”
“I want to assure Canadian seniors, who are understandably concerned about the impact of the recent sharp decline in financial markets on their retirement savings, that the government is committed to allowing them to keep more of their savings in their RRIFs for 2008,” said the Honourable Jim Flaherty, Minister of Finance. “We recognize the difficult circumstances they face. That is why we acted, and that is why we fully intend to proceed with the RRIF proposal.”
“Canadian seniors built this country and deserve to live with dignity and respect,” said the Honourable Marjory LeBreton, Minister of State (Seniors). “The decisive action that our government is taking to allow them to reduce their minimum RRIF withdrawals for 2008 by 25 per cent will help them cope with the difficulties of the global economic slowdown.”
The CRA has advised financial institutions that it can administer the proposed change before the law is passed. Further, the proposed change provides for a period of 30 days after the law is passed to make an eligible re-contribution.
The CRA has also indicated that if a taxpayer or a financial institution acts in good faith on the basis of a proposal and, subsequently, that proposal is not passed into law, the CRA will not apply penalties for acting upon the proposed change in law. However, the taxpayer may be required to withdraw the ineligible amount from their RRIF.
The CRA will work with financial institutions to ensure that individuals who wish to avail themselves of this proposed change for the 2008 tax year can do so.
The RRIF measure reduces by 25 per cent the minimum amount that a senior must withdraw from his or her RRIF in 2008. If a senior has already withdrawn more than the new reduced minimum amount, he or she can re-contribute the excess (up to the original minimum amount) and can claim a deduction on this amount for 2008. Similar rules will apply to variable benefit money purchase registered pension plans.
Further information regarding these measues is available on the Canada Revenue Agency Webside