CRA accommodates the full flow-through of a pension benefit received by the estate to the surviving spouse for s. 60(j) purposes by the estate issuing her a note

Sylvie, who was the surviving spouse and sole heir of Paul elected not to receive a joint and survivor pension under the registered pension plan in which Paul had been a member. In the calendar year following Paul’s death but within the first taxation year of the graduated rate estate, the RPP administrator paid the estate a lump sum of $350,000 less source deductions of $130,000, for a net amount of $220,000. The estate, in turn, paid Sylvie $220,000, plus an additional $130,000 out of other liquid assets of the estate or, alternatively, issued her a demand note for $130,000.

Regarding the potential for s. 104(27) to deem the full $350,000 to be an eligible amount for purposes of s. 60(j), so that Sylvie generally would be entitled to make a timely contribution of that amount to her RRSP, CRA noted:

• This principally required that the entire pension benefit received by Paul's estate have been included in computing Sylvie's income pursuant to s. 104(13), which required that such benefit from Paul's estate have become payable to Sylvie in the same estate year as that of the estate’s receipt of the pension benefit.
• Since Sylvie was Paul’s sole heir, the full pension benefit included in the estate’s income, i.e., $350,000, could be considered payable to her in that year, subject to s. 104(24).
• S. 104(24) would be satisfied if the full $350,000 was paid to her in cash, and also would be satisfied through the estate issuing the demand note “to the extent that the issuance of the note was permitted by the will and … the demand note was unconditional.”

Neal Armstrong. Summary of 3 November 2023 APFF Financial Strategies Roundtable, Q.8 under s. 104(27).