Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Will an amount received out of a pension plan by an estate twelve years after the death of an individual constitute pension income under paragraph 56(1)(a) of the Act to the estate?
Position: Yes.
Reasons: Pension amounts are taxed in the hands of the recipient, in this case the estate of the deceased.
XXXXXXXXXX 1999-001540
M. P. Sarazin
Attention: XXXXXXXXXX
February 11, 2000
Dear Sirs:
Re: Lump Sum Pension Payment to Deceased's Estate
This is in response to your letter dated December 20, 1999, wherein you requested our comments regarding the taxation of a lump sum payment to a deceased taxpayer's estate out of the deceased taxpayer's registered pension plan several years after his death.
The taxpayer, XXXXXXXXXX, died intestate on XXXXXXXXXX. In early XXXXXXXXXX, the administrator of the estate was advised that the estate was entitled to pension proceeds as a result of his employment with XXXXXXXXXX. On XXXXXXXXXX, the solicitor for the administrator of the estate received cheques of $XXXXXXXXXX and $XXXXXXXXXX from the pension plan.
You are of the view that the estate would have to include the pension payments in its income under subparagraph 56(1)(a)(i) of the Income Tax Act in the year that it is received from the pension plan.
We agree with your conclusion. You will find that your conclusion is supported by the Canada Customs and Revenue Agency's general comments in paragraph 15 of Interpretation Bulletin IT-212R3 dealing with lump-sum payments made to an estate, trust or beneficiary out of a pension plan in respect of a deceased employee.
We trust the above comment will be of assistance to you.
Yours truly,
Patricia Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate
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