(a) If amounts from a deceased holder's FHSA are deposited into the estate's account and then subsequently transferred by it directly to the surviving spouse's FHSA, RRSP or RRIF, does s.146.6(15)(a) deem that indirect transfer to be a transfer from the deceased’s FHSA, to the extent that it is so designated jointly by the legal representative and the surviving spouse in the prescribed form filed with the Minister?
(b) If yes, and as a result of the amounts paid to the estate from the deceased's FHSA being subject to withholding under s. 153(1)(v)(i), the estate does not have sufficient cash to pay the gross proceeds of that FHSA directly to the surviving spouse's FHSA, RRSP or RRIF, is it still possible for the estate to roll over all of the gross proceeds to that FHSA, RRSP or RRIF?
(c) Reverting to (a), if the estate distributed the deceased's FHSA to the surviving spouse, could the surviving spouse make the tax-free transfer to the surviving spouse’s FHSA, RRSP or RRIF.
(a)
CRA responded:
Paragraph 146.6(15)(a) allows the deceased holder's legal representative and the survivor to jointly designate, in the prescribed form filed with the Minister, payments made by the estate to a FHSA, RRSP or RRIF of the survivor to be deemed to have been transferred to the beneficiary's FHSA, RRSP or RRIF directly from the deceased holder's FHSA. In such a case, the amount so deemed to have been transferred directly could be transferred without any immediate tax consequences, provided the conditions of subsection 146.6(7) are satisfied. …
In order to be eligible for a joint designation, amounts must be distributed from the FHSA to the estate before the deceased holder's FHSA ceases to be a FHSA, generally before the end of the year following the year of the holder's death, unless the FHSA ceased to be a FHSA at an earlier date under subsection 146.6(16).
(b)
CRA responded:
The amount that can be designated jointly under paragraph 146.6(15)(a) is limited not only to the proceeds of the deceased holder's FHSA that are distributed to the estate, but also to the amount of the payment made to the surviving spouse's FHSA, RRSP or RRIF account. Therefore, to the extent that the estate does not have sufficient assets to make a payment equal to the gross proceeds of the deceased holder's FHSA to a FHSA, RRSP or RRIF of the surviving spouse, the amount of the joint designation cannot exceed the amount of the payment actually made.
(c)
CRA indicated that since the amount was paid to the survivor and not the applicable registered plan, s. 146.6(15)(a) could not apply, so that there could not be deemed to be a direct transfer from the deceased holder's FHSA to the survivor's FHSA, RRSP or RRIF for the purposes of the rules in ss. 146.6(7) and (8), However, pursuant to s. 146.6(15)(b) the amount paid by the estate to the survivor would be included in computing the survivor's income by virtue of s. 146.6(14), to the extent that it was the subject of a joint designation to that effect in the prescribed form, Form RC724.