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: Transfer of property from an RRSP on death of the annuitant, where the deceased annuitant has both a spouse and common-law partner.
Position: Provided general information.
Reasons: Information based on appropriate sections of the Act, i.e., definitions of; "refund of premiums", "annuitant", "common-law partner", 146(2)(a)(i), 146(2)(b) and 60(l).
XXXXXXXXXX 2002-016528
G. Allen
January 13, 2003
Dear XXXXXXXXXX:
Re: Transfer of RRSP/RRIF Funds to a Spouse
This letter is in reply to your letter to the XXXXXXXXXX Tax Centre, in which you ask whether it is possible to have both a spouse and a common-law spouse for purposes of the transfer of funds from a registered retirement savings plan ("RRSP") or registered retirement income fund ("RRIF") on death of the RRSP/RRIF annuitant.
Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request. For more information concerning advance tax rulings, please refer to Information Circular 70-6R5 dated May 17, 2002. Copies of information circulars, guides and pamphlets are available at your local Tax Services Office or on the Internet at http://www.ccra-adrc.gc.ca/formspubs/menu-e.html. Where the particular transactions are completed, the enquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following general comments, which may be of assistance.
The term "spouse" is not defined in the Income Tax Act (the "Act"). In general, the term "spouse" is restricted to persons who are legally married. The term "common-law partner" is defined in subsection 248(1) of the Act to include a person who at a particular time is cohabiting with a taxpayer in a conjugal relationship and has so cohabited with the taxpayer for a continuous period of at least one year.
The term "common-law partner", which became applicable January 1, 2001, has generally been added throughout the Act wherever the word "spouse" is found. Consequently, the provisions of the Act which were formerly restricted to a "spouse" have been extended to persons who meet the definition of common-law partner.
Given the above, if at the time of the RRSP/RRIF annuitant's death, the annuitant has both a spouse, and a common-law partner as defined in subsection 248(1) of the Act, either the spouse, common-law partner or both may be able to transfer property, in accordance with paragraph 60(l) of the Act, from an unmatured RRSP of the deceased annuitant on a tax-deferred basis. The tax-deferred transfer must be made by the spouse or common-law partner to an RRSP or RRIF under which the spouse or common-law partner is the annuitant, or, be used to purchase an eligible annuity as described in paragraph 60(l) of the Act.
Where an RRSP has matured and the annuitant dies, the spouse or the common-law partner of the deceased annuitant may become the annuitant under the RRSP, if the spouse or common-law partner are designated, in the RRSP contract, as the sole beneficiary of the RRSP. The annuity payments may continue after the death of the annuitant to the spouse or the common-law partner as the successor annuitant under the RRSP. The successor annuitant may also commute the value of the remaining annuity payments payable under the RRSP and transfer the commuted value to an RRSP or RRIF under which the successor annuitant is the annuitant, or the successor annuitant may purchase an eligible annuity as described in paragraph 60(l) of the Act. For more information concerning transfers on death of an RRSP or RRIF annuitant, please see the pamphlets RC4177, entitled "Death of an RRSP Annuitant" and RC4178, entitled "Death of a RRIF Annuitant".
The definitions of "annuitant" for an RRSP and a RRIF, in subsections 146(1) and 146.3(1) of the Act, respectively, do not permit more than one individual from being the annuitant under an RRSP or RRIF at any given point in time. However, there is nothing in the Act that prevents an individual from having more than one RRSP or RRIF.
We trust the above comments will be of assistance.
Yours truly,
Roberta Albert, CA
Manager
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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