21 August 1990 Internal T.I. 9008187 F - RRIF - Reporting 1991 NR4B Supplemntary

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.

This is in reply to your memorandum of May 16, 1990 concerning the proper reporting by the payer where a non-resident RRIF annuitant has died and the recipient (including the estate) of the RRIF proceeds is a non-resident.

You mention that new reporting forms NR4B Summary and Supplementary will be used beginning in 1991 and you are currently preparing a guide with respect thereto.  The guide will contain a "Special Reporting Situations" section containing numerical codes with accompanying explanations.  The appropriate code will be reflected on the NR4B Supplementary.  You ask for our views on the number of NR4B's to be issued, and the code(s) to be reflected thereon, in the following situations.  In each situation, the RRIF proceeds will be paid to the beneficiary in one lump-sum amount, including any interest earned after the date of death.

A.       The surviving spouse is the designated beneficiary under  the RRIF.  The election referred to in the preamble to paragraph 146.3(1)(f) of the Act was made by the annuitant but the spouse does not wish to become the successor annuitant.

B.       The surviving spouse is the designated beneficiary under the RRIF but the election referred to in the preamble to paragraph 146.3(1)(f) of the Act was not made by the deceased annuitant under his will or otherwise.

C.       Someone other than the spouse and the deceased's estate is the designated beneficiary under the RRIF.

D.       The RRIF proceeds are payable to the deceased's estate.

Our Comments

Further to our discussion on August 15, 1990 (Delorey/Richardson), our comments are based on the assumption that the fund remains registered up to the date payment is made to the non-resident recipient.

1.       Situation A

(a)      By virtue of the election and the definition of  "annuitant" in paragraph 146.3(1)(a) of the Act, the spouse is the RRIF annuitant.  Thus, since the last annuitant has not died, neither subsection 146.3(6) nor the exception in paragraph 146.3(5)(b) of the Act apply.

(b)      If the spouse were resident in Canada, she would be taxable under subsection 146.3(5) of the Act on all proceeds received by her under the RRIF.  Thus, paragraph 212(1)(q) of the Act applies to all payments made to her by the RRIF carrier.

(c)      Only one NR4B is required and should be coded 27; i.e., "RRIF lump sum payments".

2.       Situation B

(a)      As indicated in the second paragraph on page 2 of "Directive ASG-88-50", if the spouse were resident in Canada an amount equal to the value of the RRIF on the date of death would be included in her income under subsection 146.3(5) of the Act.  Thus, the part of the payment to the non-resident spouse that relates to this value would be taxable in her hands under paragraph 212(1)(q) of the Act since, by virtue of paragraph 146.3(6)(b) of the Act, no amount is deemed to be received by the deceased.

(b)      By virtue of subsection 146.3(3.1) of the Act, and paragraph 146.3(5)(b) of the Act, the interest earned after the date of death would be taxable as follows:

(i)      If the RRIF proceeds are paid to the non-resident spouse in the year of death, the interest would be taxable under paragraph 212(1)(q) of the Act.

(ii)      If the RRIF proceeds are paid to the spouse after the year of death, the interest earned to December 31 of the year of death would be taxable                 under paragraph 212(1)(q) of the Act and the remainder would be taxable under paragraph 212(1)(c) of the Act.

(c)      If (i) above applies, only one NR4B coded 27 would be  required.  If (ii) above applies, one NR4B coded 27 would be required for the amount taxable under paragraph 212(1)(q) of the Act and one NR4B coded 11 (i.e. "estate and trust income") would be required for the amount taxable under paragraph 212(1)(c) of the Act.

     Note that where paragraph 212(1)(c) is concerned, paragraph 214(3)(f) deems a date on which the amount is considered to have been paid to the non-resident.

3.       Situation C

(a)      By virtue of subsection 146.3(6) of the Act, an amount equal to the value of the RRIF on the date of death would be included in the deceased's income under subsection 146.3(5) of the Act had the deceased been resident in Canada.  Accordingly, the part of the payment to the non-resident that relates to this amount is taxable in the deceased's hands under paragraph 212(1)(q) of the Act.  By        virtue of paragraph 214(3)(i) and subsection 214(3.1) of the Act, the amount equal to the value of the RRIF on the date of death is deemed to have been paid to the deceased immediately before his death.  Thus, the relevant date for the purposes of subsection 215(1) of the Act would be the date of death.

(b)      If the payment is made in the year of death (see 2(b)(i) above), one NR4B coded 27 would be required for the amount deemed to have been paid to the deceased        immediately before his death and one NR4B coded 27 would be required for the amount taxable in the beneficiary's hands under paragraph 212(1)(q) of the Act.         If the payment is made after the year of death (see 2(b)(ii) above), an additional NR4B coded 11 would be required for the amount taxable in the beneficiary's hands         under paragraph 212(1)(c) of the Act.

4.       Situation D

     The comments in 3 above concerning Situation C apply except that the NR4Bs would be issued to the estate rather than to the designated beneficiary.

     The above treatment is similar to that where an RRSP trust is involved.  In this regard, we refer you to paragraphs 24 and 42 of IT-500.

Yours truly,

     for DirectorFinancial Industries DivisionRulings Directorate