Although CRA usually applies its constructive receipt concepts in the context of employment income recognition, it has applied that concept to pension income recognition under s. 56(1)(a)(i). A survivor benefit under a registered pension plan (“RPP”) is paid in a taxation year to the Quebec Unclaimed Property Directorate pursuant to the Quebec Unclaimed Property Act because the person entitled thereto (the “right-holder”) has not been determined. That person, when subsequently identified, receives from the Directorate the net amount that the Directorate, in turn, had received from the RPP, i.e., the survivor benefit payable under the RPP (as reduced by income tax source deductions) paid by the Directorate to the right-holder, as further reduced by its administration fee.
CRA indicated that the amount to be included under s. 56(1)(a)(i) in the right-holder’s income is the gross amount of the survivor benefit payable under the RPP, as indicated in the T4A slip issued by the RPP administrator, which should be included for the taxation year in which the Directorate transferred that amount to the right-holder. Its reasoning was that the amount could not be considered to be “received” as a pension benefit in the year of payment by the RPP administrator to the Directorate because the right-holder had not yet been identified – whereas in the subsequent year of payment over by the Directorate to the right-holder, that right-holder is receiving that amount under s. 56(1)(a)(i) as being “in lieu of” a superannuation or pension benefit.
CRA further stated:
[I]t is the gross amount of the survivor benefit, as shown on the T4A slip issued by the RPP administrator, that must be included in computing the income of the right-holder, even if the right-holder does not physically receive the full amount. In other words, the right-holder is, for the purposes of the Act, considered to have received not only the amount physically paid to the right-holder by the DPBNR but also the amounts that were withheld by the RPP administrator for (federal and provincial) taxes of the right-holder, as well as the fees charged by the DPBNR