24 March 1997 Internal T.I. 9707487 - DEATH, JOINT LIABILITY, 160.2(1)

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.

						March 24, 1997

	SUDBURY TAXATION CENTRE		HEADQUARTERS
G. Baronette, Director		M.P. Sarazin
(613) 957-3499
	Attention: Janet Fortin
	             T3 Assessing
						970748

XXXXXXXXXX

This is in reply to your memo dated March 14, 1997, wherein you requested our comments with respect to the concerns expressed by XXXXXXXXXX in his letter to you dated January 31, 1997 regarding the taxation of an amount included in a deceased taxpayer's income as a result of the application of subsection 146(8.8) of the Income Tax Act (the "Act") where the registered retirement savings plan ("RRSP") property has been distributed to a beneficiary, other than the deceased taxpayer's spouse, and the deceased taxpayer's estate does not have sufficient property to pay the income taxes on the income inclusion.

Comments

Subsection 160.2(1) of the Act provides that a person who receives an amount free of tax out of or under an RRSP is jointly and severally liable with the deceased annuitant for a portion of the latter's additional tax payable which arose because that amount was included in the deceased's income under subsection 146(8.8) of the Act. This joint and several liability is equal to the proportion of such additional tax to the deceased that the recipient's tax-free share of the RRSP amount is of the total of the RRSP amounts included in the income of the deceased for the year of death by virtue of subsection 146(8.8) of the Act. In the situation where the deceased taxpayer's only asset on death is an RRSP and the designated beneficiary under the RRSP is someone other than the deceased taxpayer's spouse, the beneficiary would be liable for all of the additional taxes incurred by the deceased taxpayer as a result of the income inclusion under subsection 146(8.8) of the Act.

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