The executor of the estate of the deceased annuitant of an RRSP trust was unaware of the RRSP, did not notify the issuer of the RRSP, and settled and distributed the estate (to herself as the sole heir, being teh surviving spouse) without regard to the RRSP. After the RRSP became unclaimed property, a Commission (the "DPBNR") responsible for administering Québec’s Unclaimed Property Act ("UPA") instructed the RRSP issuer to wind up the RRSP, i.e. to dispose of the securities held therein, and to remit the proceeds of disposition in cash to the DPBNR. In a subsequent taxation year, the surviving spouse of the deceased RRSP annuitant claimed and received the amount (plus interest and net of fees) from the DPBNR by virtue of being the sole estate beneficiary.
CRA found that the amount paid to the surviving spouse was to be included in her income under the surrogatum principle as being in lieu of a payment that would have been received under s. 146(8). In this regard, however, it noted:
[A]t the time the DPBNR (as administrator) received a benefit under an RRSP on behalf of an unidentified beneficiary (the beneficial owner), the beneficial owner was unknown and could not be identified. However, it is [its] longstanding position … that the CRA must … rely on the facts as they exist at the end of the taxation year. …
To the extent that, at the end of a particular taxation year in which the DPBNR received a benefit under an RRSP, the beneficial owner was not identified with certainty, the facts as they existed at the end of the particular taxation year did not permit the benefit to be included in computing a taxpayer's income. The fact that the identity of the beneficial owner is clarified in a subsequent year does not change the facts as they existed at the end of the particular taxation year. Consequently, an amount received in a particular taxation year by the DPBNR on behalf of a beneficial owner and paid in a subsequent year to the same beneficial owner, once identified, is not required to be included in computing the beneficial owner's income in the particular taxation year.