8 July 2002 External T.I. 2002-0127135 - Proof: Vested Indefeasibly

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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Proof that property has vested indefeasibly as per 70(6)

Position: All evidence available including: a copy of the death certificate, a copy of the will, a copy of the trust agreement and the documentation evidencing the actual legal transfers of the property.

Reasons: 70(6)

XXXXXXXXXX 								2002-012713
	Pascal Tétrault
July 8, 2002

Re: Meaning of the words "If it can be shown" for the application of subsection 70(6)

We are writing in response to your letter of February 28th, 2002 wherein you asked for a technical interpretation of the words "if it can be shown" in the context of the application of subsection 70(6) of the Income Tax Act (the "Act"). More specifically, you ask us to detail the types of proof the Canada Customs and Revenue Agency (the "CCRA") would require of a taxpayer to show that property has been transferred or distributed within the 36-month vesting period described in that subsection.

Comments

Subsection 70(6) provides in part as follows:

Where any property of a taxpayer who was resident in Canada immediately before the taxpayer's death that is a property to which subsection (5) would otherwise apply is, as a consequence of the death, transferred or distributed to

(a) the taxpayer's spouse ... or

(b) a trust, created by the taxpayer's will...

if it can be shown, within the period ending 36 months after the death of the taxpayer or, where written application therefor has been made to the Minister by the taxpayer's legal representative within that period, within such longer period as the Minister considers reasonable in the circumstances, that the property has become vested indefeasibly in the spouse or common-law partner or trust, as the case may be, the following rules apply:

Contrary to the suggestion in your letter, the words "if it can be shown" are not new to this subsection and refer, not to whether the property has been transferred or distributed, but rather to whether the property has become vested indefeasibly within the stipulated time frames. In other words, the rules of subsection 70(6) will apply to a transfer of property to a deceased taxpayer's spouse or a trust created by the taxpayer's will only if it can be shown that the property has vested indefeasibly in the transferee, i.e., that there is an unassailable right of ownership in the property of the spouse or common-law partner or trust, as the case may be, as stated in Interpretation Bulletin IT-449R.

To answer your question, as we understand it, as to what the CCRA would accept as proof that property has vested indefeasibly, we would note that this is not, strictly speaking, a question of interpretation, but is rather a question of application of the law and therefore a matter for our assessors to determine as the need arises. The CCRA would normally make this determination on a case-by-case basis, taking into account all of the relevant facts, circumstances and evidence available including a copy of the death certificate, a copy of the will, a copy of the trust agreement and the documentation evidencing the actual legal transfers of the property.

If you have a particular case that you would like assistance with, you should contact your local Tax Services Office.

The above comments are an expression of opinion and are not binding on the CCRA, as explained in paragraph 22 of Information Circular 70-6R5. We trust that the foregoing will be of assistance to you.

Yours truly,

for Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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