At Mr. X’s death in November 2015, he held a registered retirement income fund (RRIF) with a fair market value (FMV) of $140,000, which stayed at that level until that sum was distributed in January 2016 to his executor who, in turn, transferred that sum to Mrs. X as the sole beneficiary. The minimum amounts for 2015 and 2016 were $11,000 and $10,000, respectively. In accordance with s. 146.3(6.2), $140,000 was deducted from the income amount that the deceased was deemed to receive under s. 146.3(6). Can CRA confirm that $140,000 was the eligible amount of Mrs. X under s. 146.3(6.11), so that this amount can be transferred to her RRIF or RRSP, or to purchase an anuuity, under s. 60(l)(v)?
CRA responded:
[A]ll elements of the formula refer to the same year, being…the year of the inclusion of the designated benefit in computing the spouse's income under subsection 146.3(5).
In your example, the taxation year in element C of the formula in subsection 146.3(6.11) is the year 2016, which is the taxation year in which Mrs X is required to include the designated benefit in computing her income by reason of the combined application of subsections 146.3(6.1) and 146.3(5). Since the RRIF annuitant died in the prior year, the lesser of the amounts in variables (a) and (b) of element C of this formula will be the amount of variable (a), which is nil. Indeed, no amount will be included in computing the deceased annuitant's income by virtue of subsection 146.3(5) for the taxation year subsequent to that of death.
In your example, taking as given that the portion of the designated benefit of the individual which is included in computing the income of the spouse under subsection 146.3(5) is $140,000, then the eligible amount in your example would be $130,000.