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: Does paragraph 146(16)(b) permit a tax free transfer from an individual's RRSP to his/her former common-law partner's RRSP or RRIF in settlement of rights arising on the breakdown of their common-law partnership, where the individual dies before the transfer is made?
Position: No.
Reasons: Paragraph 146(16)(b) does not apply after the death of the transferor annuitant.
XXXXXXXXXX
2011-041882
Jason R. Ward
613-957-9769
November 14, 2012
Dear XXXXXXXXXX:
Re: RRSP - Transfer of Funds to Former Common-Law Partner’s RRSP or RRIF
This is in response to your email of August 29, 2011, wherein you requested our opinion on whether paragraph 146(16)(b) of the Income Tax Act (the “Act”) would apply where an individual agrees to transfer property from his registered retirement savings plan (“RRSP”) to his former common-law partner’s RRSP or registered retirement income fund (“RRIF”) in settlement of rights arising on the breakdown of their common-law partnership and the individual subsequently dies before the transfer is made.
Our Comments
Although this Directorate does not comment on transactions involving specific taxpayers except by way of an advance income tax ruling in respect of proposed transactions, we are pleased to provide the following general comments.
Paragraph 146(16)(b) of the Act permits a tax-free transfer of an amount directly from an unmatured RRSP, on behalf of the individual who is the annuitant under the plan, to an RRSP or RRIF under which his or her current or former spouse or common-law partner is the annuitant, provided the individual and his or her current or former spouse or common-law partner are living separate and apart and the transfer is made pursuant to a court order or written separation agreement relating to a division of property in settlement of rights arising out of, or on the breakdown of, their marriage.
In our opinion, paragraph 146(16)(b) of the Act will not apply to permit a tax-free transfer from an individual’s unmatured RRSP to an RRSP or RRIF under which his or her current or former spouse or common-law partner is the annuitant in a situation where the individual dies before the transfer is made.
We trust the above comments will be of assistance.
Yours truly,
Lita Krantz, CA
for Director
Deferred Income Plans Section II
Financial Industries and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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