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Ottawa, January 24, 1996
1996-006

Canada Savings Bonds now eligible for CSB-RRSP Contribution

Related document:

• Backgrounder.

Finance Minister Paul Martin announced today that holders of outstanding series of Compound Interest Canada Savings Bonds (C-Bonds, Series 42 to 50) will be able to transfer their bonds into a Registered Retirement Savings Plan, with no need for a self-directed plan.

"This new feature will help bondholders build up retirement savings and continue to benefit from the attractive rates on Canada Savings Bonds," Minister Martin said. "There will be no administrative fees or service charges to the bondholder."

Series 42 to 49 CSBs are now earning a guaranteed minimum rate of 6 3/4 per cent and will earn 7 1/2 per cent for the year beginning November 1, 1996. Last fall's Series 50 earns a minimum of 5 1/4 per cent for the year beginning November 1, 1995, 6 per cent the following year, and 6 3/4 per cent the year after.

A special application form will be sent by mail within the next few days. Bondholders who would like to take advantage of this new option must complete and return the application along with the appropriate bond certificates. Bondholders who do not receive an application may obtain one by calling the toll-free CSB Information Service. To benefit from this feature for the 1995 taxation year, completed applications must be received by the close of business on February 29, 1996.A backgrounder on the new CSB-RRSP option is attached.

CSB Information Service

Toll-free Number: 1-800-575-5151
Web Site: http://www.bank-banque-canada.ca/csb-oec
E-mail Address: csb@bank-banque-canada.ca

___________________
For further information:

J.R. LaBrosse
Department of Finance
(613) 992-9214

Backgrounder

The New CSB-RRSP Transfer Option

Your Canada Savings Bonds now offer an exciting new feature. You can transfer your holdings of Compound Interest Canada Savings Bonds (C-Bonds, Series 42 to 50) into a Registered Retirement Savings Plan (CSB-RRSP), with no need for a self-directed plan. There are no administrative fees or service charges.

Questions and Answers

What are the benefits of this new feature?

This feature allows holders of Compound Interest Bonds (C-Bonds) to take advantage of the RRSP tax deduction while continuing to benefit from the attractive rates paid on CSBs:

• Series 42 (1987) to 49 (1994) are guaranteed to earn a minimum of 6 3/4 per cent for the year beginning November 1, 1995 and 7 1/2 per cent the following year.
• Series 50 (1995) earns a minimum of 5 1/4 per cent for the year beginning November 1, 1995, 6 per cent the following year and 6 3/4 per cent the year after.

How do I transfer my Canada Savings Bonds into a CSB-RRSP?

Simply complete the special application form and mail it along with your CSB certificates, using the postage paid envelope provided. If you do not receive an application form within the next two weeks, call the CSB Information Service at the toll-free number 1-800-575-5151 to obtain one.

When can I transfer my bonds?

You can transfer your Compound Interest Bonds into a CSB-RRSP at any time. However, to get a receipt for the 1995 taxation year, your completed application form and bond certificates must be received by the Trustee (The R-M Trust Company) by 5:00 p.m. on February 29, 1996, so it is important to act quickly.

How much am I allowed to contribute?

Your 1995 deduction limit is shown on your 1994 Income Tax Notice of Assessment. Consult your 1995 Income Tax Guide for information on how to verify this amount.

Is the CSB-RRSP contribution simply the par value of my contributed bonds?

No. Your contribution will be comprised of the par value of your bonds plus accumulated interest. The following table gives you the value of a $100 bond for each series. For further information, call the CSB Information Service at 1-800-575-5151.

When will I receive a confirmation that the RRSP contribution has been made?

You will receive an account statement and a tax receipt which will confirm your contribution amount within 4 weeks of mailing the application form and bond certificates.

What happens if my bonds are lost in the mail?

We've designed the CSB-RRSP enrolment process to be as secure as possible. Don't forget that your Canada Savings Bonds are registered in your name and, therefore, only you can cash them. To ensure your bonds arrive quickly and securely, we've enclosed a postage paid return envelope. If you don't receive your tax receipt within 4 weeks of mailing your bonds, call the CSB Information Service at 1-800-575-5151 immediately. In the unlikely case that your certificates were lost, they will be replaced.

Can I contribute only part of a certificate's value to the CSB-RRSP?

Yes. You can have the certificate split into smaller denominations, thereby allowing you to make a smaller RRSP contribution. Your contribution will be the par value desired plus accumulated interest; the balance of the value of the bonds will be returned to you in smaller denominations.

Is there an age restriction for contributing to the CSB-RRSP ?

Yes. Individuals may not contribute to an RRSP past the end of the year in which they turn 71.

Can I contribute to a spousal RRSP?

Yes. Simply complete Section 3 of the application form.