11 June 1997 External T.I. 9714805 - REFUND OF PREMIUMS TWO SPOUSES

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 deceased annuitant have a married spouse and a common law spouse for purposes of transferring an RRSP and/or a RRIF?

Position: Yes

Reasons:

Definition of spouse in 252(4)(a).

5-971480
XXXXXXXXXX Franklyn S. Gillman

Attention: XXXXXXXXXX

June 11, 1997

Dear Sirs:

Re: Death of an Annuitant

This is in reply to your letter dated May 27, 1997 wherein you requested clarification as to the tax consequences with regards to the transfer of funds in a registered retirement savings plan ("RRSP") and a registered retirement income fund ("RRIF") of a deceased annuitant.

As stated in your above-mentioned letter, the facts that you described relate to a proposed transaction. Assurances as to the tax consequences of proposed transactions can only be given in response to a formal request for an advance income tax ruling which would involve, amongst other things, a full analysis of the proposed transactions including a thorough review of the relevant agreements pertaining to the proposed transactions. Consequently, we are not in a position to give a response to your inquiry.

However, we are prepared to offer the following general comments which may be of assistance to you.

In addition to a person who is married to the taxpayer, a spouse is defined in paragraph 252(4)(a) of the Income Tax Act (the "Act") as including a person of the opposite sex who cohabits with the taxpayer in a conjugal relationship and is either the parent of the taxpayer's child or has cohabited with the taxpayer throughout a 12-month period ending before that time. This is often referred to as a common law relationship. If during the 12-month period the parties separate for 90 days or more due to a breakdown in their conjugal relationship, a new 12-month period must be established commencing after the separation. Once a 12-month period has been established, it is not necessary to re-establish such a period after a separation of 90 days or more. However, during separations of 90 days or more which occur after the 12-month period is established, the couple will not be considered spouses under the Act.

Given the above, if at the time of the annuitant's death, the annuitant is both married and living common law as described in paragraph 252(4)(a) of the Act, either one or both of these spouses could be named as the designated beneficiary of the annuitant's RRSP and/or RRIF and make a tax-deductible transfer to the spouse's RRSP, RRIF or eligible annuity as the case may be.

These opinions are our best interpretation of the law as it applies generally. They may, however, not always be appropriate in the circumstances of a particular case. As stated in paragraph 22 of Information Circular 70-6R3 written opinions are not advance rulings and, accordingly, are not binding on the Department.

We trust these comments will be of assistance.

Yours truly,

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