CRA notes the inapplicability of an interspousal rollover where the deceased annuitant’s RRSP had already matured

The deemed income inclusion to the deceased RRSP annuitant under s. 146(8.8) (equalling the FMV of the property in the plan) is potentially reduced under s. 146(8.9), so that if the surviving spouse is the beneficiary, s. 146(8.9) reduces the s. 146(8.8) inclusion, and the spouse is taxed under s. 146(8) on the “benefit” received, which typically is a “refund of premiums” that can be rolled into the spouse’s RRSP under s. 60(l).

When asked whether an amount can be deducted under s. 146(8.9) when the surviving spouse is designated in the contract as successor annuitant of a matured RRSP, CRA indicated, no: for s. 146(8.9) to apply, an amount must otherwise be deemed to be received pursuant to s. 146(8.8) and an amount must qualify as a refund of premium - which is not possible in the case where the annuitant dies after the maturity of the RRSP.

CRA also indicated that when the annuitant of an unmatured RRSP dies and the surviving spouse is named as the sole beneficiary in the contract, the issuer should issue the T4RSP slip in the name of the surviving spouse, instead of in the name of the deceased where the entire refund of premiums is transferred directly under s. 60(l) to an RRSP under which the spouse is the annuitant and, before December 31 of the year following that of death, all the RRSP property is distributed.

Where the RRSP issuer is notified of the death of the annuitant after the due date for filing the T4RSP information return (at the end of February following the year of death “the issuer will be required to file an additional T4RSP … for the deceased annuitant within a reasonable time after being notified of the death.”

Similar interpretations were provided for the comparable RRIF provisions.

Neal Armstrong. Summaries of 8 April 2020 External T.I. 2016-0668991E5 F under s. 146(8.9), s. 146.3(6.2), Reg. 214(4), Reg. 215(4) and Reg. 205(1).