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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Whether annuitant could name either legal or common law spouse in RRSP and both would qualify for "refund of premiums" treatment of property in RRSP at death.
Position TAKEN:
Yes.
Reasons FOR POSITION TAKEN:
Wording of definition of "spouse" in 252(4)(a) does not preclude.
XXXXXXXXXX 950554
May 30, 1995
Dear XXXXXXXXXX:
Re: Meaning of "Spouse" under the Income Tax Act
This is in reply to your letter of February 17, 1995, in which you ask whether you would be considered to have two spouses for purposes of the rules respecting registered retirement savings plans (RRSP's) and the tax-deferred transfer of RRSP property to a spouse on the death of the annuitant. You explained that you are separated from your wife and have lived in a common-law relationship for the past three years.
Since this is a factual situation we are unable to provide you with an opinion which would be binding on the Department. We can, however, provide the following general comments for your information.
In addition to a person who is married to the taxpayer, a spouse is defined in paragraph 252(4)(a) of the Act as including a person of the opposite sex who cohabits with the taxpayer in a conjugal relationship and is either the parent of the taxpayer's child or has cohabited with the taxpayer throughout a 12-month period ending before that time. This is often referred to as a common law relationship. If during the 12-month period the parties separate for 90 days or more due to a breakdown in their conjugal relationship, a new 12-month period must be established commencing after the separation. Once a 12-month period has been established, it is not necessary to re-establish such a period after a separation of 90 days or more. However, during separations of 90 days or more which occur after the 12-month period is established, the couple will not be considered spouses under the Act. The following examples explain these requirements.
EXAMPLES
A man and woman live together in a conjugal relationship commencing on January 1 in Year 1 and have no children; they will be considered to be spouses of one another for purposes of the Income Tax Act on January 1 of Year 2 if there has been no separation of 90 days or more.
If instead the same couple live together on January 1 of Year 1, separate on March 1 of Year 1, reconcile on June 1 of Year 1 (after 92 days), and live together continuously until June 1 of Year 2, they will be considered spouses of one another on June 1 of Year 2. If they again separate on June 2 of Year 2 and reconcile on September 13 of Year 2 (after 103 days), they will not be considered spouses during the period June 1 through September 12 of Year 2, but will be considered spouses on September 13 of Year 2.
Upon the death of an annuitant of a registered retirement savings plan (RRSP), the property in the RRSP can be transferred on a tax-deferred basis to the spouse of the annuitant if the spouse is named the designated beneficiary of the RRSP. Basically, the amount received by the spouse is brought into the spouse's income in accordance with subsection 146(8) and paragraph 56(1)(h) of the Act and then the spouse can take a deduction under paragraph 60(l) for the whole or part of that amount which is contributed to the spouse's RRSP in the year it is received or within 60 days of the year end. In addition to a transfer to an RRSP, the spouse may transfer amounts to a registered retirement income fund (RRIF) or use the amount to purchase an annuity as described in paragraph 60(l) of the Act. Further information concerning tax-deferred transfers on the death of an RRSP annuitant is contained in the 1994 RRSP and Other Registered Plans for Retirement Guide, at pages 24 and 32. A copy of this guide can be obtained at your local tax services office.
Therefore, if at the time of the annuitant's death, the annuitant is both married and living common law as described in paragraph 252(4)(a) of the Act, either one of these spouses could be named as the designated beneficiary of the annuitant's RRSP and make a tax-deductible transfer to the spouse's RRSP, RRIF or eligible annuity.
We hope the foregoing comments are helpful.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1995
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1995
Email this Content