25 January 1994 Internal T.I. 9405667 - SOCIAL BENEFITS REPAYMENT

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:

The issue is whether the net income for the purposes of the Part I.2 Tax (social benefits repayment) includes the combined net incomes from the final return of deceased individual and separate returns (subsections 70(2), 104(23), and 150(4)) or only the net income of each return on its own (i.e., the Part I.2 tax is applied to each tax return on an independent basis).

Position TAKEN:

Section 180.2 should be applied on an independent basis in respect of each return.

Reasons FOR POSITION TAKEN:

Following a consideration of a memorandum (930498) and

XXXXXXXXXX it has been decided to follow the position in the memorandum.

		January 25, 1995

	Winnipeg Processing Centre 	Head Office
Ms. Lynne Prosak	Rulings Directorate
	Group Head - T1 Client Services	M. Eisner

940566

Social Benefits Repayment

This is in reply to your memorandum of March 4, 1994 concerning subsection 70(2) and section 180.2 of the Income Tax Act (the Act). We regret the delay in our response.

The legal representative of a deceased person must file an "ordinary" income tax return reporting the income from January 1 of the year of death to the date of death. In certain circumstances, the legal representative has the opportunity to exclude certain types of income (rights or things) from the ordinary return under subsection 70(2) of the Act and report them on a separate income tax return as though the taxpayer were another person.

You have requested our views on the application of section 180.2 (Part I.2 tax) of the Act where the filing of a separate return under subsection 70(2) is involved. In general, the provisions of section 180.2 provide for the repayment of old age security benefits where a taxpayer's net income, as modified pursuant to that provision (hereinafter, a reference to net income is to be regarded as a reference to net income described within section 180.2), exceeds $50,000. The issue is whether the net income for the purposes of the Part I.2 Tax includes the combined net incomes from the final return of a deceased individual and the separate return or only the net income of each return on its own (i.e., the Part I.2 tax is applied to each tax return on an independent basis.).

XXXXXXXXXX

Our conclusion is that we have accepted that section 180.2 of the Act be applied in the manner set out in the memorandum. Accordingly, section 180.2 should be applied on an independent basis in respect of each return rather than combining the incomes from the separate return and the ordinary return for the year of death. As a further comment, it would follow that section 180.2 is to be applied in the same manner in respect of separate returns that may be filed in respect of taxpayers under subsections 150(4) and 104(23) of the Act.

Should you require further technical assistance, we would be pleased to provide our views.

P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Rulings Directorate
Policy and Legislation Branch