Is the option to include a Canada Pension Plan (“CPP”) or Quebec Pension Plan (“QPP”) death benefit on a post-2015 T3 return will no longer be available because of s. 104(13.3)? After noting that “the option to include the CPP/QPP death benefit in income on a T3 return will no longer be available by making a designation under subsection 104(13.1) if the estate’s taxable income (determined as though the designation were valid) for the year is greater than nil,” CRA referenced its statement in 2011-0401851C6 that:
where the initial taxation year of a testamentary trust coincides with the executor year and where the sole reason for the rights of a beneficiary being unenforceable is the existence of an executor’s year, the CRA will consider the income of the trust for that year to be payable to the beneficiary or beneficiaries of the trust pursuant to subsection 104(24).
CRA then concluded:
To the extent that a CPP/QPP benefit is payable to a beneficiary of the estate in the tax year that it was received by the estate, the amount so payable would be included in the beneficiary’s income under subsection 104(13) and would be deductible by the estate under subsection 104(6). However, where the amount was not payable to a beneficiary of the estate in the tax year that it was received by the estate, it would be taxable in the hands of the estate.