Wenikajtys Estate – Tax Court of Canada notes that the 36-month GRE rule is anomalous where the estate was precluded from receiving pension income within the 36 months

The estate of an individual who died in January 2014 was entitled to receive a lump sum from a municipal pension plan. However, later in 2014, a Quebec Act required that 20% of such amount be held back until it was determined whether the pension plan members should bear the costs of a reorganization of the pension plans for Quebec municipal employees. In June 2018, it was determined that such costs would not be borne by them, and the 20% holdback was released to the estate.

After finding that the estate could not benefit from graduated rates on this last payment of income because it no longer satisfied the 36-month test in the definition of a graduated rate estate, Boyle J went on to note that if the estate applied for a remission order, then hopefully the Minister would agree with the executor and with him “that the application of the 36-month rule in this case seems to lead to an unfair and unreasonable result, and that the public interest that led to the adoption of that rule does not apply in this case” so that remission could be recommended.

Neal Armstrong. Summary of Wenikajtys (Succession) v. The Queen, 2021 CCI 93 under s. 248(1) - graduated rate estate – (a).