CRA indicates that it was for the trustee to determine whether an amount was payable at year end to a beneficiary

After the trustee had (it believed) finished the administration of an estate, it was notified by the Government of Canada Pension Centre that a pension payment was still owing to the deceased, which amount was then paid and received by the estate on the last day of the estate’s taxation year, and distributed by the trustee in the following taxation year. Given that the 36-month period for the estate to continue qualifying as a graduated rate estate had expired (which Headquarters stated it had no discretion to extend), the estate was subject to tax at the top marginal rate on the pension receipt unless it was eligible for an offsetting deduction under ss. 104(6) and (24) in the year of receipt.

Headquarters indicated that whether this was so was “a question of law and fact which only the Trustee can determine” and that if “the Trustee determines that the beneficiary was, on [that date] entitled to enforce payment of the lump-sum amount received by the Estate” the beneficiary would be required to include the amount in income under s. 104(13). This answer effectively was an invitation to the Individual Returns Directorate to show some leniency.

Neal Armstrong. Summaries of 15 June 2021 Internal T.I. 2020-0867081I7 under s. 104(24), s. 248(1) – GRE, and s. 104(27). See also 2021-0883041C6.