Mr. X, who died on January 1, 2018, made a specific bequest of his TFSA to his surviving spouse (Ms. Y). However, the estate administration proceeded slowly, and it was not until after December 31, 2019, i.e., the rollover deadline in para. (a) of the s. 207.01(1) definition of “exempt contribution” (the “Definition”), that the executor liquidated the TFSA and paid the proceeds of $100,000 (also corresponding to the TFSA’s value on death) to Ms. Y.
Is Ms. Y permitted to make a contribution to her TFSA as an “exempt contribution” upon receipt of the funds? CRA responded:
[P]aragraph (a) of the Definition gives the Minister the discretion to extend the rollover period. In such a case, the rollover period so extended shall be relevant not only for the purposes of paragraph (a) but also for the purposes of paragraph (b). As a result, a survivor payment made after December 31 of the first calendar year that begins after the death of the TFSA holder could satisfy the conditions of paragraph (b) of the Definition, provided that the Ministerial discretion is exercised to extend the rollover period. Thus, in the situation described, Ms. Y could, after receiving the amounts paid by the executor, make a contribution to her own TFSA and designate it as an exempt contribution, if the Ministerial discretion is exercised in her favour to extend the rollover period.