26 September 1997 Internal T.I. 9707617 - MISSING PERSONS PRESUMED DEAD BY COURT

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:

date of death for tax purposes when an individual is presumed dead by order of the court

Position:

date to be decided by mutual agreement between dept and trustee, the date of the court order being an acceptable choice

Reasons:

the court order, which may specify an earlier date (the date the person went missing), is not binding on the department and is not a declaration of fact but a presumption of fact. Since the actual date cannot be known, the use of a mutually agreed upon date, such as the date of the court order, is reasonable. If the date the person went missing is used, some assessments will need to be cancelled, some options may not be available and consideration must be given to waiving late filing penalty and interest

September 26, 1997
Scarborough Tax Services Headquarters
Group 471-1-2 A. Humenuk
957-8953
Attention: Lois Sellers
970761

XXXXXXXXXX
Missing Person Presumed Dead by Order of the Court

We are replying to your memorandum dated March 19, 1997, requesting our assistance in determining the proper method of filing returns for an individual who is presumed dead by order of the court by reason of her disappearance.

Attached to your memorandum is a copy of an order made by the Ontario Court (General Division)

XXXXXXXXXX

In matters dealing with a missing person where there is no certain knowledge of death, resort may be had to a legal presumption. At common law, there is a presumption that a person is dead if he or she has been continuously absent from his or her home for seven years and has not been heard from by those who would normally have received news from him or her if he or she were alive, unless there are circumstances to the contrary. The law provides several instances where a court order may be made presuming a person to be dead after the person has been unheard of for seven years, including matters relating to the administration of an estate. It is also possible for an order to be made before lapse of the seven year period where the facts of the disappearance involve a specific known peril and where sufficient evidence indicating death is presented to the court.

A court order which sets out the legal presumption of death does not declare a person to be dead or state that the person died at a particular time or date. The order merely says that the missing person is presumed to be dead as of a certain date. We understand that such an order is binding upon the parties to the application, but does not dispense with the necessity of proving the fact of death if the applicant relies upon that fact in any other court. Also, the order can only be made incidental to the exercise of the court's jurisdiction in other proceedings. In this case, it appears that the order was made in connection with the application by XXXXXXXXXX to be appointed as trustee of the estate.

Based on the court order and in view of the passing of the seven year presumptive period, we suggest that XXXXXXXXXX be considered a deceased person for income tax purposes. Although the court order indicates that XXXXXXXXXX is presumed dead as of XXXXXXXXXX, for administrative expediency, you may wish to suggest that the date of the court order, XXXXXXXXXX, be used for tax purposes.

If the estate trustee does not concur with this suggestion and prefers to use the date specified in the Court order, the XXXXXXXXXX income tax return for XXXXXXXXXX will have to be reassessed to reflect the deemed dispositions that occur upon death. Although the normal reassessment period for her XXXXXXXXXX return has likely expired, subsection 152(4.2) of the Act provides the authority to reassess a return after the expiry of the normal reassessment period if such a reassessment results in a refund or a reduction in tax payable and the taxpayer or taxpayer's representative has made application therefor. The estate trustee could file a rights and things return under subsection 70(2) of the Act for the year of death, since the deadline for filing the election in this case would be 90 days from the date of the notice of reassessment. However, it should be noted that subsections 70(3) and 104(6) of the Act would not be applicable to any of the years prior to the year in which the court order was made because no amount could be payable to a beneficiary before the date of the Court order. Any assessment of tax payable by XXXXXXXXXX for taxation years subsequent to the date of death would have to be nullified and additional assessments issued in respect of the trust returns that would be required for the same time period. If this course of action is taken, we suggest you obtain the trustee's concurrence to apply any refunds arising by reason of the cancellation of such assessments to the tax payable by the estate, if any, in respect of the same time period and that consideration be given under subsection 220(3.1) of the Act to waiving any late filing penalty or interest which would otherwise be assessed in respect of the tax payable by the estate.

C. Chouinard
A/Section Chief
Business, Property & Employment Section
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch