| 5-921323 | ||
| 24(1) | M.P. Baldwin | |
| (613) 957-8953 |
Attention: 19(1)
May 5, 1992
Dear Sirs:
Re: Refund of Premiums on death of the Annuitant
This is in reply to your letter of February 3, 1992 in which you request a technical interpretation on amounts received out of a registered retirement income fund ("RRIF") as a refund of premiums on the death of the annuitant.
The Department's position with respect to a refund of premiums out of a RRIF is if at the time of death the annuitant had no spouse and the child was financially dependent on the annuitant, the proceeds paid out of the deceased annuitant's RRIF can be treated as a refund of premiums pursuant to subsection 146.3(6.1) and paragraph 146(1)(h) of the Income Tax Act (the "Act").
With respect to the financially dependent requirement, subparagraphs 146(1)(h)(iii) and (iv) of the Act provide that it shall be assumed, unless the contrary is established, that the child was not financially dependent on the annuitant at that time if:
(a) any person other than the annuitant was permitted a deduction under paragraph 118(1)(d) of the Act in respect of the child in computing his tax payable under Part 1 for the taxation year immediately preceding the taxation year in which the annuitant died, or
(b) the income of the child exceeded $5,000 for the year immediately preceding the taxation year in which the annuitant died.
According, in the situation described in your letter and assuming (a) above is met, the child would be considered financially dependent on the annuitant and the proceeds from the annuitant's RRIF would be considered a refund of premiums to the child.
We trust the above comments will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch