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: whether payment from estate to siblings is taxable
Position: no
Reasons: the deceased is responsible for the tax on the value of the RRIF
2000-006151
XXXXXXXXXX Denise Dalphy, LL.B.
(613) 957-9231
January 26, 2001
Dear XXXXXXXXXX:
Re: Payment on Settlement of Litigation relating to an Estate
We are writing in reply to your letter dated October 13, 2000 wherein you requested an opinion on whether amounts that will be provided to your clients will be subject to income taxation.
Written confirmation of the consequences inherent in particular transactions are given by this directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R3. Where the particular transactions are partially completed or completed, the enquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following comments which are of a general nature.
On the death of a RRIF annuitant, where there is no qualified beneficiary (in general terms a spouse or financially dependant child or grandchild) of the RRIF the fair market value of the property of the RRIF held at the time of the annuitant's death is included in the deceased annuitant's income for the year of death. Where amounts are paid from the Lawyer's Professional Indemnity Corporation for damages for a solicitor's negligence and by an estate to settle litigation, the siblings of a deceased RRIF annuitant would not generally (for example, there is no connection between the payments and a business of the siblings, etc.) be subject to income taxation on the receipt of such amounts.
The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R3, the above comments do not constitute an income tax ruling and accordingly are not binding on the Department. Our practice is to make this specific disclaimer in all instances in which we provide an opinion.
Yours truly,
Steve Tevlin
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
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