26 May 2009 External T.I. 2009-0312421E5 - Presumption of 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.

Principal Issues: The presumed date of the annuitant's death as declared by the Court Order precedes the date of the Court Order by 7 years and as a falls outside the tax free period prescribed in paragraph 146(4)(c) ITA.

Position: The date of the actual Court Order can be used as the date of death for the purposes of paragraph 146(4)(c) ITA.

Reasons: Reliance on the date of the retroactive presumption of the annuitant's death would give rise to an unintended tax consequence.

XXXXXXXXXX 						2009-031242
							Richard Aronoff
							613-941-7239
May 26, 2009

Dear Sirs:

Re: XXXXXXXXXX

This is in reply to your letter of May 1, 2009 concerning the tax treatment of a Registered Retirement Savings Plan (the "RRSP") administered by XXXXXXXXXX on behalf of the annuitant, the late XXXXXXXXXX . The nature of her death has given rise to unanticipated tax implications resulting from the timing and the manner in which her death was established.

The pivotal factor driving the tax consequences arises from the difference in the timing of the Court Order establishing the presumption of the annuitant's death and the date on which she is presumed to have died. The presumption of death under the Survivorship and Presumption of Death Act, R.S.B.C. 1996, c. 444, was made by an Order of XXXXXXXXXX the Supreme Court of British Columbia on XXXXXXXXXX . The Order provided that XXXXXXXXXX , was presumed to have died on XXXXXXXXXX .

The Supreme Court of British Columbia granted Letters of Administration on XXXXXXXXXX to XXXXXXXXXX , who was identified therein as the common law widower of the deceased. It is noted that XXXXXXXXXX is also the beneficiary under the RRSP. He is seeking a "refund of premiums" within the meaning of the definition provided in subsection 146(1) of the Income Tax Act (the "Act") and a corresponding deduction under paragraph 60(l) to offset the inclusion into his income under subsection 146(8). However, the proposed treatment of the refund of premiums may be impacted to the extent that the provisions of paragraph 146(4)(c) may have been engaged given the retroactive presumption of death. Subject to the provisions of subsection 146(4), generally, no tax is payable on the income of a trust governed by an registered retirement savings plan; however, paragraph 146(4)(c) is triggered by the death of the last annuitant under the plan. It provides that tax is payable by the trust on its taxable income for each year after the year following the year in which the last annuitant died. The application of paragraph 146(4)(c) in the unique context of the retroactive presumption of XXXXXXXXXX death could give rise to an unintended tax consequence.

Given the circumstances of this case, we agree that XXXXXXXXXX , being the date on which the Court made the Order presuming XXXXXXXXXX to have died, can be used as the date of death for the purposes of paragraph 146(1)(c) of the Act.

We trust our comments will be of assistance to you in addressing the beneficiary's instructions regarding the disposition of the RRSP. Meanwhile, should you have any further questions or require additional information, please do not hesitate to contact Richard Aronoff at the telephone number indicated above.

Yours truly,

B.J. Skulski
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

c.c. XXXXXXXXXX