22 September 1995 Internal T.I. 9522107 - RRIF, H DIES AND W DIES MONTH LATER

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:

Where annuitant of a RRIF dies and wife designated as surviving annuitant, would original annuitant include RRIF income in final return where the wife dies before receiving any payments out of the RRIF?

Position TAKEN:

No

Reasons FOR POSITION TAKEN:

Wife becomes last annuitant and she is deemed to have received all of the property in the RRIF immediately before her death.

		September 22, 1995

	PETERBOROUGH TAX SERVICES OFFICE	HEADQUARTERS
	Suzanne Burden	M.P. Sarazin
(613) 957-3499
		952210

XXXXXXXXXX Registered Retirement Income Fund

This is in reply to your memorandum of August 21, 1995 wherein you requested our comments regarding the tax consequences pertaining to the following situation.

Facts

XXXXXXXXXX At that time, he was the annuitant of an Registered Retirement Income Fund ("RRIF") which held property having a fair market value of $XXXXXXXXXX Under the terms of the RRIF contract, XXXXXXXXXX designated that his wife ("XXXXXXXXXX") become the annuitant of the RRIF after his death. We shall assume that the designation was not revoked in XXXXXXXXXX last will and testament.

XXXXXXXXXX passed away on XXXXXXXXXX before receiving any payments under the RRIF contract.

XXXXXXXXXX

Comments

Generally, the tax consequences can only be determined subsequent to a review of the RRIF contract, the content of the annuitant's Last Will and Testament (the "Will") and any actions taken by the executor of the Estate and the surviving spouse after the annuitant's death.

In the case where the RRIF contract contains a written election to have the RRIF payments continue to the surviving spouse or where the annuitant's Will contains a written election to have the RRIF payments continue to the surviving spouse, the surviving spouse would become the annuitant of the RRIF pursuant to paragraph (b) of the definition of "annuitant" in subsection 146.3(1) of the Income Tax Act (the "Act"). In addition, in the case where the RRIF contract and the Will did not contain a written election, the surviving spouse could become the annuitant of the RRIF if the annuitant's legal representative consented to the surviving spouse becoming the annuitant of the RRIF, and the RRIF carrier agreed to continue the RRIF payments to the surviving spouse. In either case, the surviving spouse becomes the annuitant under the RRIF and there would be no immediate tax consequences as a result of the original annuitant's death.

Where neither of the above two cases exist then the annuitant is deemed to have received, immediately before death, an amount out of the RRIF equal to the fair market value of the property of the RRIF at the time of death. However, an amount subsequently paid to the estate may be treated as a designated benefit where the surviving spouse and the deceased annuitant's legal representative file an election (Form T1090) with the Department or, where there is no spouse, a financially dependent child or grandchild and the deceased annuitant's legal representative file the election. In this regard, we would refer you to the 1994 T4RSP and T4RIF Guide.

In the above situation, XXXXXXXXXX became the annuitant under the RRIF contract after XXXXXXXXXX death. As a result of XXXXXXXXXX death, she, as the last annuitant of the RRIF, would have been deemed to have received, immediately before death, an amount out of the RRIF equal to the fair market value of the property of the RRIF (including the interest income earned in the period subsequent to XXXXXXXXXX death) at the time of her death. The T4RIF Supplementary slip should have been issued to XXXXXXXXXX in 1993 with the fair market value of the RRIF property as at XXXXXXXXXX in box 18.

We trust the above comments will be of assistance to you.

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

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