Principales Questions: Whether a joint election, as defined in subsection 60.03(1), can be made by a pensioner and a pension transferee where (1) the pensioner has become a bankrupt during a calendar year or (2) the pension transferee has become a bankrupt during a calendar year.
Position Adoptée: Yes, in both situations.
Raisons: Subsection 128(2) does not exclude the joint election under section 60.03, nor the inclusion or deduction pursuant to paragraphs 56(1)(a.2) and 60(c). Because the split-pension election relates to the taxation year, it is possible for a pensioner and a pension transferee to jointly elect for each of his or her pre-bankruptcy and post-bankruptcy taxation years, providing the conditions stated in section 60.03 are met. If the pensioner becomes a bankrupt in a year, the split-pension amounts deducted on the returns filed for the pre-bankruptcy and/or the post-bankruptcy taxation year(s) of the pensioner pursuant to paragraph 60(c) must be reported as income on the pension transferee’s return for the calendar year, according to paragraph 56(1)(a.2). If the pension transferee becomes a bankrupt in a year, the split-pension amount deducted by the pensioner should be apportioned between the pre-bankruptcy and the post-bankruptcy taxation years of the pension transferee, based on the eligible pension income received in each taxation year. In such a situation, the split-pension amount that relates to the post-bankruptcy taxation year of the pension transferee will generally be reported on the return filed by the bankrupt under paragraph 128(2)(f).