Mr. A left his entire estate to a spousal trust for his wife, Ms. A. After Mr. A's death, the trustee made a capital distribution as an encroachment on capital to Ms. A in an amount equaling the FMV of Mr. A's RRSP (being $100,000) immediately before his death and, thereafter, the executor of the estate and Ms. A jointly elected under s. 146(8.1) in the amount of $100,000. Before the end of the year, Ms. A contributed $100,000 from her own funds as a premium to her RRSP.
Can such election be made, and can Ms. A utilize the s. 60(l) deduction? CRA responded:
Subsection 248(25) provides that a person is beneficially interested for the purposes of the Act where the person has any right (whether immediate or future, whether absolute or contingent or whether conditional on or subject to the exercise of any discretion by any person or partnership) as a beneficiary under a trust to receive any of the income or capital of the particular trust either directly from the particular trust or indirectly through one or more trusts. In such a case, that person is a beneficiary within the meaning of subsection 108(1).
We are of the view that subsection 146(8.1) would apply in the Particular Situation, as Ms. A is a beneficiary of Mr. A's estate.
The $100,000 that was deemed to be received by Ms. A in respect of a benefit that was a refund of premiums would be included in computing her income under subsection 146(8) and paragraph 56(1)(h) for 2006. Furthermore, Ms. A would be able to deduct under paragraph 60(l) in computing her income for 2006 the $100,000 that was paid before the end of 2006 as a premium to an RRSP under which she was the annuitant.