I have a client that her ex passed away. She was beneficiary of his RRSP’s.
The ex was not a client so i don’t have authorization
My client received the RRSP $$ in 2023. She did not receive a slip - which should be to the deceased and included in terminal return correct?
The issue is the deceased’s daughter was advised by a lawyer not to file a terminal return - what can they do?
what about the the T4rsp?
title should say deceased and no return
Your client should be receiving a T4RSP slip with Box 18 “Refund of Premiums” showing the amount of the transfer from the husband’s RRSP account to the Wife’s RRSP account. This slip will be issued in your client’s name (the wife) receiving the RRSP’s. This Box 18 amount will be added to her income on Line 12900 (RRSP income).
The wife now requires an RRSP Contribution Slip from the bank to offset this income. The RRSP contribution slip should say “Pursuant to Subsection 60(L)” which informs CRA it is a direct transfer.
I had a situation last year with my spousal clients of many years. The wife died and the bank didn’t issue these slips. I had to send the husband back to the bank “several times”, including giving him redacted samples of these slips, before the bank finally complied and issued the slips to him! Inexperienced bank staff, and even though I gave them redacted samples showing the Subsection 60L, they still failed to report the 60L on the slip. Non-the-less, we used it anyway as it still provided the offset that we required to prevent the husband from paying tax on that income.
You client will also have to go the bank to request these documents, or rather, the husband’s executor will have to make these requests (assuming that’s the daughter?).
@kozakworld I’m reading things a little differently. @cheryl said it was an “ex-spouse” and it almost seems as if she received the proceeds in cash rather than a transfer into her RRSP. Essentially she is simply a named beneficiary of the plan.
In these cases, the T4RSP gets issued to the deceased. The only T4RSP issued to the beneficiary is for anything earned between death and the date the plan was collapsed and paid out (box 28 - other income).
If my assumptions are correct the onus is on the estate administrator for the decedent to file a final T1 return and report the income on the terminal return. If they follow the advice of the lawyer and “do nothing” the CRA will eventually send out a letter requesting a return be filed. Even though it is the estate that is responsible for the tax the CRA can go after the beneficiary if there is not enough money in the estate to cover the tax on the RIF.
Of course, I may have read the topic incorrectly. 
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Good catch, @snoplowguy. I didn’t even consider this interpretation of what @cheryl wrote. Re-reading her post, you may be right. Not enough information was provided to get a full picture.
Also remember that the beneficiary of an RRSP/RRIF can be held responsible for the pro-rata share of the tax on those funds in the final tax return of the deceased.
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yes she is an ex and she did receive in cash
i agree about the t4rsp’s
she didn’t receive one and it must be in the deceased name
the big issue is they don’t plan on filing a terminal return and without a will or assets - CRA will rightfully come after my client
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thank you so much for the replies.
I had a similar situation a few years ago - deceased was already in debt to CRA (declined to take on that file) & advised my client/beneficiary to set aside a portion of the funds “just in case”, nothing yet from CRA…
@cheryl This is an interesting one. When the beneficiaries are different than the executor, I suppose there is nothing to force the executor to file the appropriate returns that would be in the best interest of the estate and ultimately the beneficiaries. I am curious how this pans out. Please keep us posted.
@LMK probably smart not to take the file but how long does your client need to hold those “just in case” funds? If the proper returns where never filed and tax not paid, could this be GAAR and CRA can go back indefinitely?
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Subsection 160.2(1) details the responsibility of the beneficiary as well as the financial limit of that responsibility.
The O’Callaghan case is an interesting read too…
https://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/146047/index.do
Subsection 160.2(1)
Joint and several liability in respect of amounts received out of or under RRSP
160.2 (1) Where
(a) an amount is received out of or under a registered retirement savings plan by a taxpayer other than an annuitant (within the meaning assigned by subsection 146(1)) under the plan, and
(b) that amount or part thereof would, but for paragraph (a) of the definition benefit in subsection 146(1), be received by the taxpayer as a benefit (within the meaning assigned by that definition),
the taxpayer and the last annuitant under the plan are jointly and severally liable to pay a part of the annuitant’s tax under this Part for the year of the annuitant’s death equal to that proportion of the amount by which the annuitant’s tax for the year is greater than it would have been if it were not for the operation of subsection 146(8.8) that the total of all amounts each of which is an amount determined under paragraph 160.2(1)(b) in respect of the taxpayer is of the amount included in computing the annuitant’s income by virtue of that subsection, but nothing in this subsection shall be deemed to limit the liability of the annuitant under any other provision of this Act.
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this is helpful - thank you
my client wants to include the amount of the T4rsp that would be issued to her deceased ex
she doesn’t have the slip but knows the amount
do u think this is prudent to ensure she doesn’t get caught up with interest etc.
concerned cra will be confused
Personally I think her including it would only increase the confusion…perhaps you could help her ballpark a portion to set aside? Any chance the ex’s daughter would provide an estimate of the income that won’t be reported on a final return, or share why the law office gave that advice?
apparently the deceased was in debt and no will or executors.
the daughter was told by a lawyer to just ignore it because he was bankrupt
i am not sure if any value added by contacting cra
thank you
No one mentioned a testamentary trust filing for 2024?
If the deceased was bankrupt, who is going to pay an accountant to file a T3? I imagine that’s the reason the lawyer said to ignore filing the terminal T1 as well…?
Lawyers aren’t accountants, they’re lawyer’s, and unless they’re tax lawyers, from my experience, they usually need guidance.
I don’t see where it’s mentioned anywhere that bankruptcy was a factor. A terminal return should most definitely be filed, and any income that is prolonged into a subsequent period should be dealt with in a testamentary manner.
Accordingly, the estates fees should be billed to the estate and settled before obtaining the applicable clearance certificate. That RRSP $ rightfully would belong to the beneficiary(s), they can pay it with that.
If the client was bankrupt however, you’re right in that there would be no recourse, although I haven’t actually dealt with a bankrupt estate as of yet (surprisingly lol).