I’m working on the final return for taxpayer who had previously filed his own returns - he overcontributed in the 1st 60 of 2024 (reported on the ‘23) and then overcontributed some more in fall ‘24 (ineligible retiring allowance) before passing away later in the year, so all of it was deemed rec’d upon death. Is there any way to deduct the unused contributions under such circumstances (as T746 doesn’t have a line for T4RSP box 34)? The related T1-OVP has already been filed. Any advice is appreciated!
From what I’ve looked into, the answer is no to any deductions for unused contributions in this scenario. T746 is for box 20 or 22 (RSP withdrawals, not 34 fmv/ deemed income inclusion at death).
The T1-OVP is not relevant to the deduction; it is for excess contribution tax.
There is no legislative or administrative mechanism to claim the deduction in this scenario that I’m seeing but look forward to another opinion.
We’re the prior years’ returns all filed correctly? Is the unused RRSP contribution total high enough to warrant confirming that all relevant income was reported fully?
I do not see any reason to preclude a deduction…
If you read the page you cited, regarding the approved T3012A, it would report withdrawn RSP funds in box 20 or 22. Not 34 as in the query.
If you meet all of the previous conditions and have not already withdrawn the unused RRSP contributions, you can withdraw them without having tax withheld. To do this, fill out Form T3012A, Tax Deduction Waiver on the Refund of Your Unused RRSP, PRPP, or SPP Contributions from your RRSP, PRPP or SPP.
Withdrawal made without Form T3012A
The amount should be reported on your income tax and benefit return as follows:
Withdrawal from
RRSP – Information slip received T4RSP box 22, reported on line 12900
Withdrawal made with Form T3012A that we approved
The amount should be reported on your income tax and benefit return as follows:
Withdrawal from
RRSP – Information slip received T4RSP box 20, reported on line 12900
deregistration on death is a deemed withdrawal though….
You do you.
The rules for deduction with T746 are clear. Deemed inclusion is not an actual refund of premiums.
A client of mine was desk audited/reviewed (and approved) for requisite T3012A and T4RSP showing box 20 or 22. It is for an actual refund of premiums, not deemed. See Internal T.I. 2002-0124467, and review yourself for context: 13 September 2002 Internal T.I. 2002-0124467 - RRSP AMOUNTS PAYABLE AFTER ANNUITANT DIES | Tax Interpretations
As was noted above, the RRSP amounts remain with XXXXXXXXXX. No amount has yet been paid to the beneficiary. There can be no refund of premiums until such time as an amount is actually paid out of or under the RRSP to the beneficiary.
We would not agree with the executor’s argument that the beneficiary has constructively received a refund of premiums as she has effective control over the amount. When the annuitant under an RRSP dies, subsection 146(8.8) of the Act deems the annuitant to have received, immediately before death, a benefit equal to the fair market value of the property held in the RRSP at that time. The amount included in the deceased annuitant’s income as a result of his or her death, pursuant to subsection 146(8.8), may be reduced by the amount of a “refund of premiums” paid to the deceased annuitant’s spouse or common-law partner, or a financially dependent child or grandchild. The application of the doctrine of constructive receipt would generally render the tax provisions in respect of the death of an RRSP annuitant in subsection 146(8.8) redundant.
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I think you can ask CRA to consider part of the redemption on death as a withdrawal of the over-contribution of the RRSP; I think it is worth contacting CRA; it may take a long time based on current timeline on simple adjustments; but if you are proactive and patient, I think you can get CRA to consider:
To avoid having taxes paid on an unwithdrawn RRSP over-contribution after the taxpayer’s death, the legal representative of the estate should contact the Canada Revenue Agency (CRA) in writing to request a deduction on the deceased’s final tax return.
Steps for the Legal Representative
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Do not withdraw the amount yourself after the death, as the over-contribution should have been withdrawn by the annuitant during their lifetime.
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Gather all relevant documentation, including proof of the exact months of all RRSP contributions and withdrawals, and any evidence supporting that the excess contribution was due to a reasonable error.
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Contact the CRA in writing to establish the amount of the deduction that can be claimed. The letter should explain the situation and ask for the deduction to be applied to the deceased’s final tax return.
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Claim the deduction on the appropriate line of the deceased’s final tax return, as instructed by the CRA.
That is CRA interpretation of the law. What does the ITA, regs and case law say?
@LMK, has a refund of premiums been applied for, or has the RRSP been paid out to the estate?
The RSP has been paid out to the estate/beneficiaries - I had asked the financial advisor if there was anything that could be done to rectify the situation and was told “too late”.
I think I will plan to go the direction @anni suggested. I’m not fully confident in prior years’ filings but the overcontribution totals >30K with a final (late) tax bill in the 300K range so worth the effort IMHO. Hopefully I’ll be able to access the decedent’s CRA account at some point in order to verify his prior history.
Thank You all for your insight,
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