ARCHIVED – Registered Retirement Savings Plans (RRSP) and Registered Retirement Income Funds (RRIF)

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1. What is the current tax treatment for a post-death decrease in the value of an RRSP or RRIF?
2. How does the 2009 budget announcement affect the tax treatment for a post-death decrease in the value of an RRSP or RRIF?
3. How is the new deduction calculated?
4. How is the new deduction claimed?
5. Are there any circumstances where the new deduction will not be available?
6. Under proposed regulations, financial institutions will be required to file an information return in prescribed form in respect of an amount that may be deducted for a post-death decrease in value of an RRSP or RRIF. When will more information be available on this information return?
7. Where can I get more information about the proposed deduction for post-death decreases in value of an RRSP or RRIF?

1. What is the current tax treatment for a post-death decrease in the value of an RRSP or RRIF?

Currently, the value of an individual's RRSP or RRIF at the time of death is generally included in the deceased individual's income for the year of death. This income inclusion does not take into account any decreases in the value that may occur after death and prior to the final distribution from the RRSP or RRIF.

2. How does the 2009 budget announcement affect the tax treatment for a post-death decrease in the value of an RRSP or RRIF?

For final distributions that occur after 2008, from a deceased individual's RRSP or RRIF, the budget proposes to allow a deduction on the deceased individual's year-of-death return for the amount of post-death decreases in the value of the RRSP or RRIF up until the final distribution.

3. How is the new deduction calculated?

The amount of the deduction will generally be calculated as the difference between:

• the amount in respect of the RRSP or RRIF included in the income of the deceased individual as a result of the individual's death; and
• the total of all amounts paid out of the RRSP or RRIF after the individual's death.

4. How is the new deduction claimed?

Following the final distribution from the RRSP or RRIF, the deceased individual's legal representative may request a reassessment to carry back the deduction to the individual's year-of-death return.

5. Are there any circumstances where the new deduction will not be available?

Generally, the deduction will not be available in circumstances where:

• the RRSP or RRIF held a non-qualified investment (as is currently applicable to RRSPs and RRIFs) after the individual died; or
• the final distribution is made after the end of the year that follows the year in which the individual died.

However, this rule may be waived to allow the deduction to taxpayers on a case-by-case basis.

Example: Peter, an RRSP annuitant, dies on December 29, 2006. His financial institution is informed promptly of his death, but because his beneficiary designations are being legally contested, the final distribution of assets is delayed while the value of the RRSP falls. Once the dispute is settled, Peter's financial institution is only able to make the final distribution of assets from the RRSP on February 23, 2010. Peter's legal representative may request the CRA to waive the rule and allow a deduction for the post-death decrease in value of Peter's RRSP.

6. Under proposed regulations, financial institutions will be required to file an information return in prescribed form in respect of an amount that may be deducted for a post-death decrease in value of an RRSP or RRIF. When will more information be available on this information return?

The guidelines for this information return are currently being developed. The CRA encourages taxpayers and financial institutions to check our Web site often - all new forms, policies, and guidelines will be posted here as they become available.

7. Where can I get more information about the proposed deduction for post-death decreases in value of an RRSP or RRIF?

The CRA encourages taxpayers to check our Web site often–all new forms, policies, and guidelines will be posted here as they become available.

In the meantime, please consult the Department of Finance's Budget 2009 documents for details.

Date modified:

2015-07-15