In Situation 1, on the death of Mr. X, his will directed the $20,000 in his TFSA held with a Canadian financial institution to be paid as to $15,000 to his estranged surviving wife (Ms. X), and as to $5,000 to his surviving common law spouse (Ms. Y). Situations 2 and 3 are the same except that the $15,000 and $5,000 had been held by him in two separate TFSAs at two Canadian financial institutions (Situation 2) or at one such institution (Situation 3).
In Situation 1 will the CRA use its discretion to allow Ms. X and Ms. Y to designate the entire TFSA survivor payments they received ($15,000 and $5,000, respectively) as an "exempt contribution" for the purposes of s. (d)(iii) of the definition in s. 207.01(1) since the total amount ($20,000) to be designated by Ms. X and Ms. Y (the two survivors) would be equal to the amount that would otherwise be eligible for the exempt contribution designation, by virtue of para. (d), if there were only one survivor (i.e., $20,000)? Would the answers for Situations 2 and 3 change on the basis that there were two separate "arrangements," so that no exercise of CRA discretion was required? CRA responded:
[S]ubparagraph (d)(iii) of the definition "exempt contribution" in subsection 207.01(1) applies, inter alia, where payments described in paragraph (b) of that definition are made to more than one survivor of a particular individual, regardless of whether those payments originated from one or more arrangements that ceased to be TFSAs of the particular individual.
…[B]oth the payment received by Ms. X and the payment received by Ms. Y would be a "survivor payment" described in paragraph (b) of the definition of "exempt contribution". It follows that subparagraph (d)(iii) of the definition "exempt contribution" in subsection 207.01(1) would find application in all three situations.
…[A] contribution of an amount greater than nil could generally be allowed by the Minister under subparagraph (d)(iii), provided that the total amount to be designated by Ms. X and Ms. Y is less than or equal to (but not greater than) the amount that would otherwise qualify for the designation "exempt contribution" under paragraph (d) of that definition, if there was only one survivor.
Thus, in the three situations described, the respective $15,000 and $5,000 contributions of Ms. X and Ms. Y could generally be allowed … .