CRA rules that the transfer, via a revocable living trust, of the RRSP funds of a deceased non-resident to the RRSP of his non-resident widow, could be exempted from Part XIII tax

Prior to the death of the deceased, he and his wife had made RRSP contributions, then ceased to be Canadian residents. Upon his death, the taxpayer (his widow) became the sole trustee and beneficiary of a revocable living trust, which they had settled. By virtue of the death of the deceased, the taxpayer became the sole trustee and beneficiary of the trust, and the estate of the deceased was bequeathed to the trust.

Before effectively ruling that a direct transfer of the property in the deceased’s RRSPs to her RRSP could be exempted from Part XIII tax under ss. 212(1)(l)(i) and (ii), CRA noted that, provided that the s. 146(8.1) election was made, the transfers out of his RRSPs would be deemed to be refunds of premiums to her given that they were made indirectly under the deceased’s annuitant’s will, as a consequence of his death, and under the express terms of the trust. Furthermore, had she been a resident of Canada throughout the transfer year, a deduction under s. 60(l) would have been available, so that the conditions in ss. 212(1)(l)(i) and (ii) for exemption were met.

Neal Armstrong. Summary of 2024 Ruling 2022-0941881R3 under s. 212(1)(l).