16 January 2001 External T.I. 2000-0058255 - Payment before death, received after death

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 amounts paid by an RPP administrator to a member and the member's RRSP three days prior to the member's death be "rights or things" or taxable in the deceased's estate because the payments were received after the member's death?

Position: No.

Reasons: Paragraph 248(7)(a) applies and the payments are deemed to be received at the time they are mailed by the RPP administrator.

XXXXXXXXXX 2000-005825
M. P. Sarazin, CA
January 16, 2001

Dear Sir\Madam:

Re: Income of Estate or Rights or Things of Deceased

This is in reply to your facsimile of November 26, 2000, requesting our views regarding the taxation of amounts paid out of a registered pension plan ("RPP") prior to a member's death where cheques were mailed by the RPP administrator three days before the member's death. The deceased member's estate received its cheque for the excess pension benefits that could not be transferred to an RRSP two days after the member's death and the deceased member's locked-in registered retirement savings plan ("RRSP") received its cheque for the transferred pension benefits eligible for rollover three days after the member's death.

You ask whether the amounts paid by the RPP administrator can be treated as "rights or things" in the hands of the deceased individual or whether they can be treated as income of the individual's estate.

Comments

In your letter you have outlined an actual fact situation related to completed transactions. As noted in Information Circular 70-6R3 dated December 30, 1996, issued by the Canada Customs and Revenue Agency (the "Agency"), this directorate can only provide advance income tax rulings in respect of specific proposed transactions. Copies of information circulars and interpretation bulletins are available on the Internet at the following site - http://www.ccra-adrc.gc.ca/formspubs/menu-e.html. We must advise you that the review of completed transactions falls within the responsibility of tax services offices. Consequently, we can only provide you with the following general comments.

Under paragraph 248(7)(a) of the Income Tax Act (the "Act"), anything sent by first class mail or its equivalent (other than a remittance or payment described in paragraph 248(7)(b) of the Act) shall be deemed to have been received by the person to whom it was sent on the day it was mailed. Consequently, the RRSP and the member are deemed to have received the amounts paid by the RPP administrator on the date that the cheques were mailed by the RPP administrator.

The Agency's general views regarding "rights or things" are found in the enclosed Interpretation Bulletin IT-212R3 titled "Income of deceased persons - Rights or things". You will note that paragraph 15 discusses lump-sum payments out of a pension plan. However, this position does not apply where the pension plan has made the payment prior to the member's death. In this case, there is no right or thing at the time of death because the member's rights have already been paid out by the pension plan.

The enclosed Interpretation Bulletin IT-500R provides the Agency's general views regarding the taxation of amounts held in an RRSP at the time the annuitant under the RRSP dies. In our view, paragraph 5 of IT-500R applies to the locked-in RRSP described above.

We are of the view that neither of the payments made by the RPP administrator prior to the member's death will qualify as a right or thing for purposes of the Act and neither of the payments will be considered income of the deceased individual's estate.

We trust the above comments will be of assistance to you.

Yours truly,

Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate