11 April 1986 Income Tax Severed Letter 5-0368 - []

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.

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Peter K. Noack (613) 995-0051 April 11, 1986

Dear Sirs:

This is in reply to your letter of December 2 concerning income of an un- matured, trusteed RRSP for the year after December 31 of the year of the death of the annuitant.

In the situation you describe, the trust funds are to be paid out to the spouse of the deceased annuitant after December 31 and as a consequence of the annuitant's death. The spouse intends to take advantage of the provisions of paragraph 60(1) to roll over the funds received into his or her own RRSP.

Income of the trust for the year after December 31 of the year of the annuitant's death is subject to tax under the normal trust rules by virtue of paragraph 146(4)(c). By virtue of subparagraph 146(1)(b)(iii), an amount received by a beneficiary in respect of such income is not a benefit to which the rules in section 146 apply but is included in the income of the beneficiary as income from a trust. Paragraph 60(1) does not permit a roll over in respect of income from a trust other than amounts that are required to be included in income by section 146.

The trust income referred to above does not qualify as earned income for the purpose of determining the maximum amount of a premium deductible under subsection 146(5).

You may wish to refer to paragraph 24 of our Interpretation Bulletin IT-500 .

Yours truly,

for Director Financial Industries Division Rulings Directorate Legislative and Intergovernmental Affairs Branch