| 19(1) | File No. 5-9675 |
| W. Harding | |
| (613) 957-8953 |
April 4, 1990
Dear Sirs:
This is in reply to your letter of February 15, 1990 wherein you requested our opinion as to whether or not an older surviving spouse could inherit, on a tax sheltered basis, an annuity originally based on a deceased spouse's term to age 90.
Pursuant to a telephone conversation 19(1) Harding), you have further clarified that you are considering situations where a deceased was an annuitant of a matured RRSP and the surviving spouse is a beneficiary named in the plan. You are, however, also interested in cases where the beneficiary is not so named.
As discussed at paragraph 2 of the Department's Interpretation Bulletin IT500, a surviving spouse becomes the annuitant of a matured RRSP when the deceased spouse dies and the surviving spouse is designated under the plan as beneficiary. Accordingly, but subject to the terms of the annuity, the surviving spouse could continue to receive annuity payments under the plan. As the annuitant, the survivor may also commute the annuity and collapse the RRSP or take such other actions as any RRSP annuitant is entitled to do.
When the surviving spouse is not named as beneficiary in a plan the spouse would not automatically become the annuitant of the RRSP and the fair market value of the annuity would be taxable to the deceased annuitant as discussed at paragraph 3 of the bulletin. However, in this case, it is possible for the surviving spouse and the deceased's legal representative to file joint election so that the survivor will become the annuitant of the RRSP with the same rights as discussed above. Further detail is provided at paragraphs 5 and 6 of the bulletin.
We hope these comments are of assistance to you.
Yours truly,
W. Douglasfor DirectorFinancial Industries DivisionRulings Directorate