29 April 1999 External T.I. 9904535 - "BENEFIT, AFTER ANNUITANT'S DEATH

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: "Benefit" from an RRSP after Annuitant's Death

Position: Amount received is a benefit unless previously included in annuitant's income pursuant to 146(8) & (8.8)

Reasons: Definition of "benefit" in 146(1)

XXXXXXXXXX 990453
M. P. Sarazin
Attention: XXXXXXXXXX

April 29, 1999

Dear Madam:

Re: Registered Retirement Savings Plan (“RRSP”) Reporting Requirements

This is in reply to your letter dated January 21, 1999, wherein you requested information on the reporting requirements for the transfer of property from an RRSP following the annuitant’s death to the estate of the deceased annuitant.

Comments

It appears that the interpretation you seek relates to proposed transactions to be undertaken by a specific taxpayer and, therefore, we bring to your attention Information Circular 70-6R3 dated December 30, 1996. Confirmation of tax consequences with respect to proposed transactions involving specific taxpayers will only be provided in response to a request for an advance income tax ruling. If you wish to obtain an advance income tax ruling with respect to specific transactions which are contemplated, a written request for an advance income tax ruling can be submitted in accordance with the Information Circular. Nevertheless, we can provide you with the following general comments.

The Department's general views regarding the taxation of amounts held within a deceased annuitant’s RRSP can be found in Interpretation Bulletin IT-500R, Registered Retirement Savings Plans - Death of an Annuitant. You will note that paragraph 12 of this bulletin states that only amounts paid out of an RRSP that exceed the amount deemed to have been received by the deceased annuitant immediately before death and included in the annuitant’s income, will be income to the recipient under subsection 146(8) of the Income Tax Act (the “Act”).

For example, where property having a fair market value of $120,000 is transferred to the deceased annuitant's estate before the end of the year following the year in which the annuitant died and the deceased annuitant included $100,000 of that amount in his or her income pursuant to subsections 146(8) and (8.8) of the Act, the estate would have an income inclusion of $20,000 under subsection 146(8) of the Act and a T4RSP slip should be prepared to indicate the $20,000 income inclusion.

We trust these comments will be of assistance.

Yours truly,

Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate