24 November 1999 Internal T.I. 982063A - SUCCESSOR ANNUITANT, RENUNCIATION

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: Can a RRIF successor annuitant renounce his or her rights under the RRIF contract so that RRIF property is taxed in the hands of the original RRIF annuitant on death?

Position: Yes.

Reasons: Even though there is no provision in the Act to allow for the renunciation of RRIF rights under the contract by a successor annuitant, the courts have ruled that a beneficiary has a legal right to renounce or disclaim a legacy. We will now accept the renunciation of such rights which is a reversal of the position expressed in 9833225.

			November 24, 1999

	Ottawa Tax Services Office	Headquarters
P. Y. Middlestead			M.P. Sarazin
	Director				957-8953
	Attention:  Bill Lutha
	      Estates, 4th Floor

						982063

XXXXXXXXXX

This is to advise you that we have reconsidered our position, expressed in our memorandum dated September 22, 1998, regarding a successor annuitant's right to renounce his or her rights under a registered retirement income fund ("RRIF") contract.

In our memorandum, we stated that no provision of the Income Tax Act (the "Act") allowed or required the value of the RRIFs to be included in XXXXXXXXXX income at the time of her death becauseXXXXXXXXXX was the successor annuitant under the RRIF contracts.

We have reconsidered our position and we now accept that a successor annuitant would be entitled to renounce his or her rights as successor annuitant under a RRIF contract where the successor annuitant was not a party to the RRIF contract. Even though the Income Tax Act (the "Act") does not provide for a renunciation of such rights, the courts have generally concluded that a beneficiary has a legal right to renounce or disclaim a legacy.

Whether an individual who is not a party to the RRIF contract has renounced his or her rights as successor annuitant under the RRIF contract is a question of fact and law that can only be determined after a review of all of the facts and an analysis of their legal effect. Where the successor annuitant is not a party to the original RRIF contract and the successor annuitant renounces his or her rights under the RRIF contract, the deceased annuitant under the RRIF contract would be the last annuitant for the purposes of subsection 146.3(3) of the Act. Consequently, the deceased annuitant shall be deemed by subsection 146.3(6) of the Act to have received, immediately before death, an amount equal to the fair market value of the property in the RRIF at the time of death.

Patricia Spice
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate