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: Routine questions on trasfers from and to RRSPs
Position TAKEN: Routine replies provided
Reasons FOR POSITION: Routine
XXXXXXXXXX 5-950082
Attention: XXXXXXXXXX
March 28, 1995
Dear Sirs:
Re: Registered Retirement Savings Plans (RRSPs)
This is in reply to your facsimile of January 12, 1995 regarding the following questions on contributions, transfers and withdrawals of amounts into or out of RRSPs.
1.Transfers of amounts held in an RRSP of a deceased annuitant.
In your submission you noted that a spouse who is a beneficiary of a deceased annuitant's estate but not of an RRSP of the deceased, can jointly file an election with the legal representative of the estate, using form T2019, in order to transfer amounts received by the spouse from the estate to an RRSP. You then asked if the amount had to be transferred within 60 days of the calendar year in which:
a. the estate receives the funds;
b. the beneficiary receives the funds; or
c.the annuitant passed away.
The Department's publication "1994 RRSP and Other Registered Plans for Retirement" which is available from your local District Taxation Office, provides detailed explanations for the transfer of amounts from an RRSP upon the death of the annuitant. These can be found on pages 24 and 32 through 33 of the guide in respect of unmatured RRSPs and on page 25 in respect of matured RRSPs. In general, funds can only be transferred from an unmatured RRSP and must be transferred in the year they are received by the estate or within 60 days after the end of that year.
2.Contributions to Spousal RRSP after the death of the contributor.
In your second query you noted that contributions may be made to a surviving spouse's RRSP within the year of death or within 60 days thereafter, up to the amount of the deceased's RRSP deduction limit for the year of death. You then asked if the amount was deductible on the return of the deceased or the surviving spouse.
A detailed explanation of this provision can also be found in the above-noted guide on page 14. Subject to the normal contribution limits, a deduction of contributions made by the legal representative of the deceased to a spousal RRSP can be deducted in computing the deceased's income for the year of death if the contribution is made in the year or within 60 days thereafter.
You should note that the legal representative may also be able to deduct up to $6,000 of periodic pension payments transferred to a spousal RRSP within the same time period. This is explained on pages 14 and 32 of the guide as well.
3.Withdrawals of amounts invested in Mutual Funds.
In your last query you requested clarification of the taxability of various amounts when funds invested in mutual funds by an RRSP are withdrawn from the RRSP.
When funds are withdrawn from an RRSP by the annuitant, the full amount of the withdrawal must be reported on a T4RSP and be included as income by the annuitant. If the amount withdrawn is paid in kind, the fair market value of the payment must be used. Accordingly, if units of a mutual fund are withdrawn from an RRSP their fair market value at the time of withdrawal must be included in income.
If units of a mutual fund are withdrawn from an RRSP their cost to the annuitant will also equal the fair market value of the units at the time they are received and the annuitant can thereafter treat them for tax purposes as he or she would treat any units of a mutual fund held personally. However, it should be noted that there is no provision for the flow through of dividend tax credits on dividends paid while the units were held by the RRSP and a capital gains exemption for gains accrued to February 22, 1994 is not available to the annuitant for units held by an RRSP.
The above comments are based on our understanding of the law as it applies in general and may or may not apply to the circumstances of a particular case. They do not form an advance income tax ruling and they are not binding on the Department.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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