CRA stated that where an estate receives a lump sum from a pension plan of the deceased beyond the 36-month period in which it could qualify as a graduated rate estate (“GRE”), CRA would have no discretion to extend the 36-month period.
The executor was unable to distribute the income under s. 56(1)(a)(i) to the sole beneficiary before the end of the year of receipt. CRA indicated that the income could be included in the sole beneficiary’s income under ss. 104(13) and (24) if the beneficiary was entitled to enforce payment of the lump-sum benefit.
CRA then indicated that since the estate no longer qualified as a GRE when the lump-sum pension benefit was received by it, s. 104(27) could not be utilized to flow through, to the beneficiary, the character of the pension benefits received. Instead, pursuant to s. 108(5), the pension benefit would be deemed to be income of the beneficiary for the year from a property that is an interest in the estate.