19 April 2000 External T.I. 2000-0014985 - CHILD AS SUCCESSOR ANNUITANT

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 minor child or infirm child be named as a successor annuitant under a RRIF contract?

Position: No.

Reasons: The terms of a RRIF contract can only allow a surviving spouse to become a successor annuitant.

XXXXXXXXXX 						2000-001498
M. P. Sarazin
Attention: XXXXXXXXXX 

April 19, 2000

Dear Sirs:

Re: Child as Successor Annuitant under a RRIF

This is in response to your letter dated March 6, 2000, wherein you requested our views as to whether, subsequent to the death of the annuitant under a registered retirement income fund ("RRIF"), a dependent child or grandchild could become a successor annuitant under the RRIF.

Under paragraph 146.3(2)(d) of the Income Tax Act (the "Act"), a RRIF will not be accepted for registration unless the terms of the RRIF provide that, except where the annuitant's spouse becomes the annuitant under the RRIF contract, the RRIF distributes the property held in connection with the RRIF at the time of the annuitant's death. Consequently, on the death of the last annuitant, amounts held in the RRIF have to be distributed to the beneficiary named in the RRIF contract or to the annuitant's estate where no beneficiary is named in the RRIF contract.

You comment that when a RRIF distributes an amount to a minor child or mentally infirm child, it may be very difficult to have the amount transferred to a registered retirement savings plan, or to a RRIF, or used to acquire an annuity contract, because the child may not be legally bound by the particular contract. You ask whether the particular child could be treated as a successor annuitant under the deceased annuitant's RRIF contract. This would avoid the contractual uncertainties related to a new contract for the benefit of the child and the child would be entitled to continue to receive the stream of payments from the RRIF.

Comments

As you have noted, a RRIF contract is only permitted to allow the annuitant's spouse to become a successor annuitant. Consequently, the Act does not permit a minor child or a mentally infirm child to become successor annuitant under a RRIF contract.

The Canada Customs and Revenue Agency is responsible for administering the provisions of the Act. Since you are requesting that the Act be amended to allow a minor child or mentally infirm child to become a successor annuitant under a RRIF contract, we will forward your letter and a copy of this reply to the Department of Finance.

We trust the above comments will be of assistance.

Yours truly,

Patricia Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate

c.c. Mr. Brian Ernewein,

Tax Legislation Division
Tax Policy Branch
Department of Finance
140 O'Connor Street
L'Esplanade Laurier
17th Floor, East Tower
Ottawa ON K1A 0G5