In general, on the question of seizing registered retirement savings plans, RRSPs, the policy of the Canada Customs Revenue Agency, CCRA, is that RRSPs are a collection avenue of last resort, in that actions to attempt to seize funds in a RRSP would normally only be taken when other avenues of collection have been exhausted.
The CCRA does not keep any statistics with respect to the collection activities relating to the seizing of RRSPs and is unable to provide a response to questions (a), (b), (c). As information specifically relating to RRSPs has not been kept in any form, unfortunately the CCRA is also unable to provide a response to question (d).
However, with respect to question (c), on the amount of additional taxes resulting from the collapse of RRSPs in excess of the amount required to satisfy the crown’s debt, the following is offered:
The policy of the CCRA in this regard is to only attach to amounts that are equal to those that are due and payable. Unfortunately, on occasion this results in the collapse of a plan containing funds in excess of the amount owed to the crown. This, however, is as a result of the conditions contained in the covering plan and is not caused by any inappropriate actions taken by the CCRA.
In such cases, the alternative would be for the CCRA to forgo pursuing collection of the debt, which is contrary to its mandate as well as its fiduciary duty. In those situations where such action is deemed to be necessary, and which regrettably results in the collapse of a plan containing funds in excess of the amount required to satisfy the debt, there will be tax consequences on the whole amount of the funds contained in the collapsed plan.
When collapsing RRSPs, the financial institutions are required to withhold tax based on the dollar value of the RRSP that is being collapsed. Should there be any further tax consequences as a result of such collapse, there are numerous alternatives available to the tax debtor, some of which would include: holding any extra funds resulting from the collapse in order to pay off the anticipated tax debt; using those extra funds to purchase other RRSPs in order to reduce any future tax consequences; making an arrangement with the CCRA to pay installments to cover the anticipated debt; and, making arrangements with the CCRA to pay off the debt, once it has been established.