While disallowing swaps in RRSPs for now, RBC Dominion Securities is taking a reasonable stance that they will work with CRA to find a way to continue to offer swaps within the parameters of the Budget 2011, which only penalizes RRSP swap transactions that result in a “tax advantage”. (A tip of the hat to Northern Raven for digging up this nugget of news).
Our Tax Advisory Group is working closely with the Canada Revenue Agency (CRA) to determine the exact impact of the new rule, which affects clients in every financial institution. We are working with the CRA in hopes of finding a solution that may enable us to continue to offer swaps to our clients within the parameters of the new legislation.
Until we have confirmation from CRA, we will take a prudent approach and help our clients reduce the risk of being subject to the 100% tax rate. Effective July 1, 2011, similar to other financial institutions, RBC Dominion Securities will not allow swap transactions involving RRSP/RRIFs and other non-registered accounts until we receive more guidance from CRA. Transfers from RRSP/RRIFs to other RRSPs/RRIFs of the annuitant will still be allowed.
One hopes that other financial institutions will also take a similar reasonable view and also clearly explain their decisions to their clients.