In its 2011 budget, the federal government implemented various measures affecting investments held in registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs).
One of the key changes initiated by these measures targets “prohibited investments”. More specifically, this new concept includes investments in an entity in which the annuitant of the registered plan holds a significant interest, either alone or with one or more persons with whom the annuitant does not deal at arm’s length. Taxpayers subject to these new measures could incur substantial penalties.
These new rules generally took effect on March 23, 2011. Transitional rules are, however, provided to limit penalties on prohibited investments held in a registered plan as of March 23, 2011. In order to benefit from these relief measures, some steps may need to be taken no later than March 30, 2012.
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