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:
Must a child who is the beneficiary of a RRIF meet the financially dependent requirement if his income does not exceed the amount in 118(1)(c)
Position TAKEN:
Yes
Reasons FOR POSITION TAKEN:
5-933604
5-950647
XXXXXXXXXX G. Martineau
Attention: XXXXXXXXXX
March 17, 1995
Dear Sirs:
Re: Designated benefit
Mentally infirm child
This is in reply to your letter of February 28, 1995 concerning amounts paid out of a registered retirement income fund ("RRIF") after the death of an annuitant for the purposes of the definition of designated benefit in subsection 146.3(1) of the Income Tax Act (the "Act").
An amount paid directly from a RRIF to a child after the last annuitant's death is a designated benefit that would be refunds of premiums if the RRIF had been an unmatured registered retirement savings plan. The last annuitant must not have spouse and the child must be financially dependent on the annuitant at the time of his death.
With respect to this "financially dependent" requirement, subsection 146(1) of the Act provides that it shall be assumed, unless the contrary is established, that the child was not financially dependent on the annuitant for support at the time of the annuitant's death if the income of the dependant for the taxation year preceding the taxation year in which the annuitant died exceeded the amount used under paragraph (c) of the description of B in subsection 118(1) for that preceding year.
Where it can be established that the assumption referred to above is not applicable, an amount paid would be a designated benefit only if it can be substantiated that the child was financially dependent on the deceased annuitant at the time of his death. We are of the view that a child would not be financially dependent on an annuitant who did not provide support to his child although he had a legal responsability to provide such support.
The above comments reflect an expression of opinion only and are not binding on the Department, as explained in paragraph 21 of Information Circular 70-6R2. We trust, however, that they are of assistance.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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