Murphy Estate – Tax Court of Canada recognizes that a disclaimer has retroactive effect

An estate unsuccessfully argued that the effect of the settlement of some estate litigation pursuant to a consent order, which provided for the transfer of RRSP funds to the deceased’s surviving spouse, was to retroactively access the rollover for RRSP refund of premiums paid to a surviving spouse's RRSP. Among other problems, the consent order provided that the children (who otherwise would have been the RRSP beneficiaries) would transfer their interests in the RRSP to the surviving spouse which, of course, indicated that those interests were considered to have been accepted by them in the first instance rather than having been disclaimed. Accordingly, the RRSP proceeds were fully taxable in the deceased’s terminal return.

However, V. Miller J noted that the effect of a disclaimer "is to void the gift as if the disclaiming party never received it," which may imply that with better structuring a better result could have been achieved.

Neal Armstrong. Summary of Murphy Estate v. The Queen, 2015 TCC 8 under s. 146(8.8).