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:
Are final payments from a RRIF to the estate of the deceased plan annuitant taxable to the estate?
Position:
Yes, but only to the extent that they are not already included in the income of another taxpayer (including the deceased annuitant).
Reasons:
Paragraph 146.3(5)(a) carves out the FMV of the RRIF property at death which is deemed received by the plan annuitant immediately before his or her death.
July 18, 2001
HEADQUARTERS HEADQUARTERS
T3 Estate Return Processing P. Kohnen, CMA
2215 Gladwin Crescent 957-2093
Attention: Wendy Denard
2001-008129
Amounts received from RRIF
This is further to your facsimile submission of April 23, 2001 requesting our advice concerning the appropriate tax treatment of payments from a registered retirement income fund ("RRIF").
In accordance with subsection 146.3(5) of the Income Tax Act (the "Act"), all amounts received from a RRIF are taxable in the year in which they are received by a taxpayer, with the exception of amounts for which other provisions in the Act already included the amount in the income of another taxpayer.
Based on the information provided in your facsimile, it appears that the deceased annuitant (the "Annuitant") received a total of $XXXXXXXXXX, representing three quarterly RRIF withdrawals during 1999 and before her death. These payments must be reported on her 1999 T1 return (her final return) as income received for the year in accordance with subsection 146.3(5) of the Act.
Furthermore, in accordance with subsection 146.3(6) of the Act, an amount equal to the fair market value of the RRIF property at the date of the Annuitant's death is deemed to have been received immediately before her death. Therefore, based on the facts provided with your submission, an amount equal to $XXXXXXXXXX would also be included in the 1999 T1 return for the Annuitant.
On XXXXXXXXXX, the Annuitant's estate received a regularly scheduled quarterly withdrawal payment of $XXXXXXXXXX. As a general rule, amounts received by the estate (after the death of the annuitant), are included in the income of the estate in accordance with subsection 146.3(5) of the Act. However, given that this amount was paid out of the overall property of the RRIF, the fair market value of which was already required to be included in the Annuitant's income at death as per subsection 146.3(6), paragraph 146.3(5)(a) exempts the amount from being included in the income of the estate. Thus, it is received on a tax-free basis by the estate.
During the 2000 calendar year, the estate also received the last payout from the RRIF in the amount of $XXXXXXXXXX, representing post-death earnings of $XXXXXXXXXX as well as the remaining $XXXXXXXXXX of the fair market value of the RRIF at the date of the Annuitant's death. Again, the amount received would generally be included in the income of the estate for the 2000 tax year. However, in accordance with paragraph 146.3(5)(a), the $XXXXXXXXXX previously included in the Annuitant's income at death would be received on a tax-free basis by the estate. This would leave only the remaining $XXXXXXXXXX, representing the post-death earnings in the RRIF, to be included in the income of the estate in accordance with subsection 146.3(5) of the Act.
We trust that the above comments will be of assistance to you. Please do not hesitate to contact Phillip Kohnen at (613) 957-2093 if you have any further questions or concerns.
Mickey Sarazin, C.A.
for Director
Financial Industries Division
Income Tax Rulings Directorate
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2001
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2001
Email this Content