| 19(1) | File No. 5-9778 |
| D.S. Delorey | |
| (613) 957-3495 |
April 3, 1990
Dear Sirs:
This is in reply to your letter of March 12, 1990 concerning the transfer of registered retirement savings plan ("RRSP") funds on the death of the annuitant.
You describe a situation in which a taxpayer 24(1) You are of the view that this will result in double taxation and ask for our views on the matter.
Our Comments
As indicated in Information Circular 70-6A, a copy of which is enclosed or your perusal, the Department does not provide written comments on specific proposed transactions other than in reply to advance ruling requests submitted in the manner set out in that Circular. We nevertheless offer the following general comments.
Enclosed is a copy of Interpretation Bulletin IT-500. As indicated in paragraph 9 thereof, where the wife is the beneficiary of an estate and an amount is paid from an unmatured RRSP to the estate, the wife may elect jointly with the legal representative under subsection 146(8.1) of the Income Tax Act ("the Act") to include in her income for the year in which the payment is made that portion of the payment designated on form T2019 as a refund of premiums. As explained in paragraph 25 of IT-500, the amount that qualifies to be designated under subsection 146(8.1) as a refund of premiums is determined under paragraphs 18, 19, 22 and 24 of the bulletin. Of particular relevance to your situation are the following comments contained in paragraph 19:
"Where a refund out of a depositary plan is paid after the death of the annuitant, Interest or income eventually paid that accrued after the date of death will be included in the income of the person entitled to the deposit (i.e., the estate of the deceased annuitant or the beneficiaries) and will not qualify as a refund of premiums."
Where the wife makes a contribution to her RRSP in the year the deceased's RRSP made the payment to the estate, or within 60 days thereafter, a deduction is available to her under paragraph 60(1) of the Act. The amount deducted cannot exceed the amount included in her income as a refund of premiums by virtue of the subsection 146(8.1) designation.
The amount included in the wife's income by virtue of a subsection 146(8.1) election is deductible under subsection 146(8.9) of the Act from the amount included in the deceased's income under subsection 146(8.8) of the Act, provided the deceased's return for the year of death is not statute-barred. As noted above, the election under subsection 146(8.1) of the Act is made in the year that the amount is paid to the estate from the unmatured RRSP. Where this payment might be delayed beyond the three-year limit set out in subsection 152(4) of the Act for reassessing the deceased's return, a waiver in prescribed form (form T2029) should be filed to permit a reassessment beyond that limit. In this regard, we suggest you contact officials of the Montreal District Taxation Office.
The above comments are an expression of opinion only and are not binding on the Department, as explained in paragraph 24 of the enclosed Information Circular 70-6A. We trust however that they are of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate