T4A showing a Death Benefit

Tax Topics
1

Only 26 days to go…
The T4A is in the name of the deceased.
It is less than $10,000 and therefore not taxable.
The money has been sent to his mother.
On whose return is it reported or does it go on a T3 Trust Return? The CPP death benefit is being reported on the mother’s return. Or because it is less than 10K is it not reported?
Or do I report the income and then deduct it at Line 25600 (or someplace else)?
TIA for any assistance

2

It will gon on the inheritors’ tax return if the estate is settled within one year after death If not settled it will go on the estate’s testamentary trust return T3

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3

The value of the benefit is 9,900$. My understanding is that only the amount over 10K is reported. Is there a place for an offsetting deduction on either the T1 or the T3 returns?

4

If the survivor isn’t taxable with the additional income, put it on their return.

5

Thank you for your replies.
Foe better or worse, I contacted CRA. I was told to NOT report the income on any return because the amount is under $10K and is a one-time payment to a single beneficiary.
If the return is filed electronically, the slip and explanation are to remain in my files.
If it is paper-filed (not recommended because it is eligible foe eFile.), then attach a slip with an explanation.

6

Is this a CPP death benefit? The 10K rule is only for death benefit other than CPP
Line 13000 – Other income: Death benefits (other than CPP or QPP death benefits) - Canada.ca

For the CPP death benefit, you include it on the T3 return or line 130000 of the beneficiary’s tax return.

Taxation of CPP and QPP Death Benefit Amounts - Canada.ca

It’s worth noting at the bottom it says the following:

A death benefit will generally not be taxable if the recipient is not a beneficiary of the estate, and all of the following circumstances apply:

  • the taxpayer who received the death benefit paid the deceased’s funeral expenses
  • the amount of the death benefit is not more than the funeral expenses
  • the deceased has no heirs, and there is no other property in the estate
7

Wouldn’t THAT be something if CPP death benefit was indexed (again) at some point!