CRA finds that an exempt contribution to a deceased TRFA holder’s surviving spouse could be made indirectly via a spousal trust
The TFSA rules contemplate that the surviving spouse of a deceased TFSA holder can make an “exempt contribution” of the payment to him or her of the TFSA proceeds (the “survivor payment”) to the survivor’s own TFSA within the “rollover period” (ending on December 31 of the year following the holder’s death). One of the requirements for an exempt contribution is that the survivor payment have been made to the survivor during the rollover period “as a consequence of the individual’s death, directly or indirectly out of or under [the holder’s TFSA].”
CRA found that a bequest of TFSA proceeds to a spousal trust which, in turn, distributed the TFSA proceeds in accordance with the deceased’s will to the surviving spouse would qualify as an indirect transfer as a consequence of death, so that this requirement was satisfied. This turned on s. 248(8)(a), which deems a transfer to be as a consequence of death if it occurs as a consequence of the terms of the will, and of the breadth of “directly or indirectly.”
Neal Armstrong. Summary of 7 October 2020 APFF Roundtable Q. 5, 2020-0851601C6 F under s. 207.01(1) – exempt contribution – (b).