| Glossary of
Financial Terms | | |
 The
Companion Advisor: Taxes
& Estates
Death and taxes - Part 3/7
Registered Retirement Savings Plans (RRSPs)
For many Canadians, the largest tax liability their
estate will face is the potential tax on RRSPs. The Income Tax Act states
that unless certain conditions are met, the deceased's terminal tax return
must report the fair market value of his or her RRSP on death as income.
Tax will be payable at the deceased annuitant's marginal rate for the
year of death unless this income inclusion can be avoided (by using one
of the strategies discussed below.)
Example #3
Say Jack set up his mutual fund RRSP in 1982, naming his estate as
the beneficiary. When Jack passed away on January 15, 2001, the RRSP
account had grown to a value of $300,000. Because Jack's estate was
named as the beneficiary, the entire value of the RRSP would be included
as income in Jack's terminal return. Taxes of up to $150,000 could
be owing (see part six for exceptions to this). |
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, thereby 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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