Examples – Death of an RRSP or RIFF annuitant

Example 1 

Mark died on August 12, 2019. When he died, the fair market value (FMV) of his unmatured RRSP was $185,000. The RRSP contract named Mark’s estate as the sole beneficiary. A 2019 T4RSP slip was issued in Mark’s name to report the $185,000 FMV of the RRSP in box 34, “Amounts deemed received on death”. This amount was included in income on line 12900 of Mark’s 2019 final Income tax and Benefit Return.

The RRSP property was distributed to Mark’s estate on March 15, 2020. The FMV of that property was $150,000. The financial institution filled out Form RC249, Post-Death Decline in the Value of a RRIF, an Unmatured RRSP and Post-Death Increase or Decline in the Value of a PRPP.

The $35,000 difference between the $185,000 included in Mark’s 2019 income and the $150,000 that the estate received can be deducted on Mark’s 2019 Income Tax and Benefit Return. This is because the RRSP did not hold any non-qualified investment at any time after death and the RRSP was fully distributed by the end of the year following the year of death. Mark’s legal representative should write and ask for an adjustment to the 2019 Income Tax and Benefit Return to allow the $35,000 post-death loss to be deducted on line 23200. The filled out Form RC249 must be sent with the request.

Example 2 

Martin died on September 10, 2018. When he died the FMV of his unmatured RRSP was $185,000. The RRSP contract named Martin’s spouse Elaine as the sole beneficiary. In February 2019, Elaine asked the financial institution to directly transfer all of the RRSP property to her RRSP. On February 15, 2019, when the RRSP was fully transferred, its FMV was $150,000.

As the transfer was completed by the end of the year following the year of death, no 2018 T4RSP slip was issued in Martin’s name to report the $185,000. A 2019 T4RSP slip was issued to Elaine to report the $150,000 in box 18, “Refund of premiums". Elaine also received an RRSP receipt for the $150,000 transferred (contributed) to her RRSP.

The $185,000 FMV of the RRSP at the time of death was not included in income on Martin’s 2018 final Income Tax and Benefit Return. Elaine includes on line 12900 of her 2019 Income Tax and Benefit Return the $150,000 reported as income on her 2018 T4RSP slip. She fills out Schedule 7 and deducts the $150,000 transfer contribution on line 20800.

No deduction can be claimed on Martin’s 2018 final Income Tax and Benefit Return for the $35,000 post-death loss as the $185,000 was not included in his 2018 income.

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