What kinds of cases are you looking for?   
< Previous Case Next Case >

Income tax — RRSP on death

My client's husband died in 2007. He had an RRSP for which my client was the designated beneficiary. However, she did not take steps to move the assets out of his RRSP to her RRSP until 2013. She did not realize that it was important to do this by the end of the year after death. The RRSP was all invested in a mutual fund. It had dropped in value significantly by the end of 2008, and then recovered in later years.

On her 2013 return, my client's accountant reported the proceeds of the RRSP coming into her income and claimed an offsetting deduction because she had transferred all of it to her own RRSP. The CRA disallowed the transfer deduction, taking the position that proceeds paid after 2008 did not qualify for the deduction, and assessed my client for some $100,000 of tax. The accountant filed a Notice of Objection and then came to me for help.

I prepared a 20-page submission for the CRA Appeals Officer, explaining in great detail how the legislation applied in this case. This situation was not contemplated by the CRA publications dealing with RRSPs on death. One had to work through the legislation step by step, applying complex formulas and interpreting legislative definitions such as "refund of premiums", "tax-paid amount" and "benefit".

The Appeals Officer, who was not at all used to reading the Income Tax Act, did not understand my analysis, and said she was going to confirm the assessment. I then spent two hours on the phone with her, taking her step by step through these very complex provisions of the Act, insisting that she admit that she had to follow the legislation, and showing her how the legislation worked. Eventually she agreed that my analysis was correct, and cancelled the assessment.

Problem solved!

(2017)