| Glossary of
Financial Terms | | |
 The
Companion Advisor: Taxes
& Estates
Death and taxes - Part 4/7
Spouse as beneficiary
When an RRSP account is set up and a spouse is
named beneficiary, the value of the RRSP at death qualifies as a refund
of premiums. This refund of premiums is not taxable to the deceased
annuitant. Instead, it is taxable to the surviving spouse, who could choose
to transfer the amount directly to his or her RRSP or RRIF and claim a
deduction equal to the amount of the refund of premiums. The amount would
continue to grow tax deferred.
Example #4
Instead of naming his estate as beneficiary of his RRSP, Jack named
his wife Nancy as the beneficiary. The $300,000 value of the RRSP
would then be taxable as a refund of premiums on her 2001 tax return.
She could choose to transfer this amount to an RRSP in her name and
would receive an RRSP contribution receipt for $300,000, which would
used to offset the income inclusion of the refund of premiums. The
net effect of this is to ensure that tax continues to be deferred
after Jack's death. |
The
information in is article is subject to change, therefore be advised
its content should be viewed as illustrative to the context of the article.
Income tax laws change over time therein rendering certain numbers quoted
obsolete. Please
consult current tax rules or directly at CCRA
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, Fiscal Agents Money Management Newsletter
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