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 the spouse or common-law partner of a deceased RRSP annuitant rollover the plan benefits received to defer tax?
Position: Yes.
Reasons: Paragraph 60(l) provides rollover options for situations involving death of the plan annuitant before and after maturity of the plan.
XXXXXXXXXX 2001-007621
P. Kohnen
July 30, 2001
Dear XXXXXXXXXX:
Re: Rollover of a Spousal RRSP
This is in reply to your letter which was postmarked February 27, 2001, requesting our views regarding the tax treatment of a rollover of a spousal registered retirement savings plan ("RRSP"). The term "spousal plan" is defined in subsection 146(1) of the Income Tax Act (the "Act"). An RRSP is a spousal plan if the spouse or common-law partner of the annuitant has paid a premium under the plan, or if the RRSP has received a payment or transfer of property from another spousal plan.
Paragraph 60(l) of the Act, permits a qualifying beneficiary who receives a refund of premiums from an RRSP to deduct all or part of the amount received and reported as income. The availability of a 60(l) deduction is not contingent upon whether or not the RRSP is a spousal plan. The spouse or common-law partner of the deceased annuitant of the RRSP would be a qualifying beneficiary, in accordance with clause 60(l)(v)(A) of the Act.
Where an annuitant dies before their RRSP matures (before the RRSP commences to pay a retirement income), an amount equal to the fair market value of the RRSP property at death must be included in the income of the deceased annuitant, in accordance with subsection 146(8.8) of the Act. This amount is offset, however, by any amount which is paid as a refund of premiums to the deceased annuitant's spouse or common-law partner, as described in subsection 146(8.9). Any amount paid to the spouse or common-law partner, as a consequence of the death of the annuitant before the plan has matured, other than a tax-paid amount, would be a refund of premiums (as defined in subsection 146(1) of the Act).
The refund of premiums would be included in the income of the recipient surviving spouse or common-law partner in the year in which it is received, in accordance with subsection 146(8) of the Act. The spouse or common-law partner may then arrange for a deferral of tax, as provided for by subsection 60(l), by transferring an amount, not greater than the amount received in the year as a refund of premiums, to an RRSP. The transfer must take place in the year the refund of premiums is received, or within 60 days thereafter. The paragraph 60(l) amount is then claimed as an offsetting deduction from the income of the recipient spouse or common-law partner. It should be noted that the paragraph 60(l) deduction may also be obtained by the recipient spouse or common-law partner in respect of a transfer to a registered retirement income fund ("RRIF") or the purchase of a qualifying annuity.
Where an annuitant has died after the plan has matured (commenced to pay a retirement income), and the surviving spouse or common-law partner becomes the successor annuitant under the plan, paragraph 60(l) also provides for a direct rollover of payments received in full of partial commutation of the retirement income receivable from the plan. The commuted amount must be transferred directly by the issuer of the RRSP in the year of commutation, or within 60 days thereafter.
Note that where the annuitant of a spousal RRSP has died, the income attribution rule in subsection 146(8.3) of the Act does not apply.
We trust that the above comments are of assistance. Please do not hesitate to contact Phillip Kohnen at (613) 957-2093 should you require further information.
Yours truly,
Wayne Harding
for Director
Financial Industries Division
Income Tax Rulings Directorate
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