Principales Questions: A survivor benefit under a registered pension plan (“RPP”) is paid in a taxation year to the Direction principale des biens non réclamés ("DPBNR") pursuant to Québec’s Unclaimed property Act (“UPA”) because the person entitled thereto (the surviving spouse or the right-holders of a deceased RPP member) is unknown. In a subsequent taxation year, the person who was entitled to receive the survivor benefit (“right-holder”), now identified, claims from the DPBNR the amount it received, in accordance with the provisions of the UPA. DPBNR pays to the right-holder an amount corresponding to: the net amount received from the RPP (that is, the survivor benefit payable under the RPP, reduced by federal and provincial income tax withheld at source by the RPP administrator), less a fee that DPBNR deducts therefrom, in accordance with the UPA and its regulation. In this situation :
1) What is the amount to be included in computing the income of the right-holder?
2) In which taxation year should the right-holder include such amount in computing his/her income?
3) Does the same apply where it is an estate that would have been entitled to receive the amount, but the administration of the estate has been completed prior to the DPBNR being in a position to make a payment?
Position Adoptée: 1) The amount to be included under subparagraph 56(1)(a)(i) is the gross amount of the survivor benefit payable under the RPP, as indicated in the T4A slip issued by the RPP administrator.
2) The amount should be included in computing the income of the right-holder for the taxation year in which DPBNR has transferred him/her the amount in accordance to the provisions of the UPA.
3) Where the right-holder is an estate, it is the estate that should include the survivor benefit under subparagraph 56(1)(a)(i) in computing its income for the year of receipt. To the extent that the amount received by the estate is payable in the year to a beneficiary of the estate, subsections 104(6) and (13) should generally apply. Where the administration of the estate has been completed prior to the DPBNR being in a position to pay the amount, the CRA accepts that the estate beneficiary directly includes the amount under subparagraph 56(1)(a)(i) in computing his/her income.
Raisons: 1) Meaning of receipt and doctrine of constructive receipt.
2) At the time DPBNR receives the amount, it receives it on behalf of an unknown right-holder. Hence, the amount is not received by a taxpayer at that time as required by subparagraph 56(1)(a)(i). Besides, this provision applies not only to superannuation or pension benefits, but also to amounts received in lieu of superannuation or pension benefits. Therefore, subparagraph 56(1)(a)(i) applies in the year DPBNR remits the amount received to the now identified right-holder.
3) The law and administrative position.
