Principales Questions: Property held in a trusteed RRSP 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 is unknown. In a subsequent taxation year, the surviving spouse of the deceased RRSP annuitant claims from the DPBNR the amount it received, in accordance with the provisions of the UPA. DPBNR pays to the surviving spouse, qua sole beneficiary of the deceased RRSP annuitant’s estate, an amount corresponding to the amount received from the RRSP 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 surviving spouse?
2) In which taxation year should the surviving spouse include such amount in computing her income?
3) Is the conclusion affected by the fact that it is the estate and not the surviving spouse that would have been entitled to receive the amount from the RRSP, where the amount was paid to the surviving spouse because 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 subsection 146(8) is the amount of the benefit as determined under subsection 146(1). Where no amount can reasonably be regarded as having been included in the deceased annuitant’s income by virtue of subsections 146(8.8) and (8.9), the benefit essentially corresponds to the RRSP proceeds paid by the RRSP issuer to the DPBNR, reduced by the portion thereof which is a tax-paid amount.
2) The amount should be included in computing the income of the surviving spouse for the taxation year in which DPBNR has transferred her the amount in accordance to the provisions of the UPA.
3) Where the right-holder is an estate and subsection 146(8.1) does not apply, it is the estate that should include the survivor benefit under subsection 146(8) 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, unless subsection 146(8.1) applies. 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 subsection 146(8) in computing his/her income.
Raisons: 1) Definition of benefit in subsection 146(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 subsection 146(8). As a result of the surrogatum principle, subsection 146(8) however applies in the year DPBNR remits the amount received to the now identified right-holder.
3) The law and administrative position.
