Revenue Canada Taxation Head Office
XXX
F. Francis (613) 957-3496
November 15, 1989
Dear Sirs:
This is in reply to your letter of September 15, 1989, wherein you requested our opinion on the application of subsection 70(6) of the Income Tax Act (the "Act") in the situation where, by virtue of the last will of an individual, property is transferred to the surviving spouse for the remainder of her life with a stipulation that such property be transferred to the children on the death of the surviving spouse.
The determination of whether subsection 70(6) of the Act applies can only be made after a detailed examination of the Will and other relevant documents in each specific situation. However, we will offer the following general comments.
Generally, it is our position that the life interest of the widow and the remainder interest of the children are to be treated as separate property. As a consequence thereof, provided that the life interest of the widow vests indefeasibly in her within a period of 36 months from the taxpayer's death, it is our view that paragraph 70(6)(a) of the Act would be applicable upon the transfer of property to the spouse.
If, however, the will created a spousal trust which meets the requirements under paragraph 70(6)(b) of the Act, subsection 70(6) would be applicable upon the transfer of property to the spousal trust provided that the property vests indefeasibly in the spousal trust within a period of 36 months from the taxpayer's death.
We trust the above comments will be of assistance to you.
Yours truly,
For Director Financial Industries Division Rulings Directorate