14 August 1996 Internal T.I. 9622997 - RRIF PAYMENTS AFTER DEATH OF ANNUITANT

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

reporting of withholding on rrif payments

Position:

	no RCT position on payments after death of last 	annuitant

Reasons:

payments are not taxable

							August 14, 1996

	Winnipeg Tax Services Office	Head Office
	Client Assistance			D. Duff
	Attention: Debbie Anderson
							7-962299

RRIF Payments after Death of Last Annuitant

This is in response to your memorandum of June 26, 1996 regarding the treatment of tax withheld at source on payments from an RRIF after the death of the last annuitant. You indicated that a financial institution had requested advice for the situation where the last annuitant under a RRIF had died but, because they were not advised of the death, they continued to make the payments from the RRIF along with the related withholdings.

The only RRIF payments that are subject to withholding are described in paragraphs 100(1)(j.1) and 103(6)(d.1) of the Income Tax Regulations. These provisions only include payments made during the lifetime of the annuitant in excess of the minimum amount. There are no legislative provisions for withholding on the payments described in your memorandum.

Where the last annuitant under an RRIF has died, he is deemed by subsection 146.3(6) to have received immediately before his death, a benefit equal to the fair market value of the property in the RRIF. As this is a deemed benefit and not a payment there are no withholding requirements relating to it. Where this amount is subsequently paid from the RRIF, it is excluded from the amount the recipient is required to include in income pursuant to 146.3(5), so there is no need to apply the withholding provisions to it. However, pursuant to subsection 160.2(2), the recipient can be liable for the tax of the deceased annuitant.

We discussed the issue with Mr. Ray Cousineau, Trust Accounts Division (613-952-8179) and he advised that they have no policy for a situation such as this. However, he indicated that the financial institution would be making periodic remittances on behalf of a number of taxpayers and they could simply adjust subsequent remittances to account for these amounts. As a result the amounts would not be reported as remittances on behalf of the deceased taxpayer or his estate. The financial institution should keep proper records of the manner in which it has treated these amounts.

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate

cc: Ray Cousineau