2 June 2026 STEP Roundtable, Q.7

CRA confirmed that, generally, where the designated beneficiary of an RRSP was the former spouse of the annuitant, that beneficiary would receive the RRSP proceeds on a tax-free basis to the extent of the FMV on death and that the estate of the deceased (and, thus, ultimately its beneficiaries), would instead bear the full tax liability associated with the RRSP.

In particular:

• under s. 146(8.8), the annuitant would be deemed to have received, immediately before death, a benefit under the RRSP equal to the FMV of all property held in the RRSP at the time of death, which would be included in the deceased annuitant’s income for the year of death pursuant to ss. 146(8.8) and 56(1)(h); and
• the portion of the amount that was deemed to have been received by the deceased annuitant under s. 146(8.8) would be excluded from the former spouse’s income and, thus, would be received tax-free.

CRA confirmed that, generally, where the designated beneficiary of an RRSP was the former spouse of the annuitant, that beneficiary would receive the RRSP proceeds on a tax-free basis to the extent of the FMV on death, so that the estate of the deceased (and, thus, ultimately its beneficiaries), would instead bear the full tax liability associated with the RRSP. However, CRA also noted that s. 160.2(1) provides that where a taxpayer, other than the annuitant of the RRSP—such as the former spouse in this case—receives an amount, all or part of which is described in paragraph 160.2(1)(b), the former spouse is jointly and severally liable with the deceased annuitant for the portion of the deceased annuitant’s income tax that is attributable to the amount.