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:
Is the CCRA and the Department of Finance working on trying to find a solution to the problem which exists where the RRSP asset value declines after the death of the RRSP annuitant.
Position: Yes.
Reasons:
Even though there is no provision in the Act that allows the loss to be flowed out of the RRSP to the RRSP beneficiaries, the CCRA, working with the Department of Finance, is looking at the issues. See Comments at 2002 RRSP/RRIF Consultation Session..
XXXXXXXXXX 2002-016827
G. Kauppinen
April 1, 2003
Dear XXXXXXXXXX:
Re: Decline in value of assets held by a Registered Retirement
Savings Plan ("RRSP") After the Death of the Annuitant
This is in reply to your letter of October 7, 2002 wherein you ask whether the Canada Customs and Revenue Agency ("CCRA") and the Department of Finance are reviewing the apparent inequity in the Income Tax Act in respect of reductions in value of RRSP assets subsequent to the death of the RRSP annuitant and before the distribution of assets to the RRSP beneficiary.
In technical interpretations 2000-0006115 and 1999-0013725, the Income Tax Rulings Directorate stated that there is no provision in the Act that allows for the loss incurred in the RRSP subsequent to the RRSP annuitant's death to flow through to the RRSP beneficiary(ies).
You ask whether this result, which is very common in current economic times, has been brought to the attention of the Department of Finance.
The scenario described above was brought to the attention of the Department of Finance, which confirmed that unintended tax consequences could result in certain situations. Some time ago, CCRA asked the Department of Finance for permission to deal with the problem on an administrative basis and we have been trying to develop a policy ever since. The current status of this project is described on the CCRA internet website at http://www.ccra-adrc.gc.ca/tax/registered/2002rrspinfo-e.htm/ under item 5.
We trust our comments will be of assistance to you.
Yours truly,
Mickey Sarazin, C.A.
for Director
Financial Industries Division
Income Tax Rulings Directorate
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