Skip to main content

October 9, 2023

Transfer of an RRSP to a Spouse

Prudence when the deceased annuitant has a tax debt.

The recent decision of the Tax Court of Canada (“TCC”) in Enns v. The King1 (hereinafter “Enns”) provides a cautionary tale regarding the transfer of assets, including registered plans between spouses at death when the deceased’s estate has an outstanding tax debt. Indeed, this transfer could fall within the scope of subsection 160(1) of the Income Tax Act (hereinafter “ITA”). The purpose of this subsection is to prevent a taxpayer from avoiding the payment of tax by transferring his property to certain persons with whom he does not deal at arm’s length2. Thus, subsection 160(1) ITA allows the Canada Revenue Agency (“CRA”) to issue an assessment to the transferee in order to obtain the payment of the tax owing.

The Facts

The facts in the Enns case are as follows. Peter Enns died on May 22, 2013. He was the sole annuitant of an RRSP and he had designated Marlene Enns, his spouse, as the beneficiary of this RRSP. No consideration was paid by Mrs. Enns in exchange for this designation. Following the death of Mr. Enns, the fair market value of the RRSP, being $102,789.52, was paid out to Mrs. Enns. She subsequently transferred the funds to her retirement account. An assessment was issued by the CRA on April 12, 2017 to Mrs. Enns on the grounds that the payment of the RRSP constituted a transfer to which subsection 160(1) ITA applied. At the time of the transfer, Mr. Enns’ estate owed the CRA $146,382.05 in taxes for the 2004 to 2012 tax years.

The Issue

The issue before the TCC was whether the term “spouse” in paragraph 160(1)(a) ITA included the widow or widower of the tax debtor who made the transfer.

Mrs. Enns claimed that after Mr. Enns’ death, she had ceased to be his spouse and was now his widow. The CRA was of the opinion that the term “spouse” in paragraph 160(1)(a) ITA still applied to Mrs. Enns.

The Analysis and Decision of the TCC

As part of its analysis, the Court referred to two recent decisions which dealt with the term “spouse” in paragraph 160(1)(a) ITA. In Kiperchuk v. R3, the meaning of the term “spouse” in paragraph 160(1)(a) ITA was not explicitly at issue. Despite this, Justice Lamarre’s position was that a marriage ended at death. Thus, upon the husband’s death, the appellant was no longer his spouse. Consequently, Justice Lamarre concluded that the former spouse’s assessment under section 160 ITA was invalid. The decision was not appealed.

In Kuchta v. R4 (hereinafter “Kuchta”), the facts were almost identical to those in the present case. In that case, Justice Graham engaged in a textual, contextual and purposive analysis to interpret the meaning of the term “spouse” in paragraph 160(1)(a) ITA. In his textual analysis, he concludes that the term “spouse” in the case of a marriage means a relationship between two living persons. However, Justice Graham also concluded that the term “spouse” had a more colloquial meaning since it sometimes included a person who was the widow or widower of the deceased spouse. Thus, according to the Court, the use of the word “spouse” created an ambiguity. Under the contextual analysis, the Court refers to four provisions of the ITA which use the term “spouse” to include the taxpayer’s spouse at the time of the taxpayer’s death. Finally, as part of the purposive analysis, the Court was of the opinion that Parliament did not intend to exclude widows and widowers from the application of paragraph 160(1)(a) ITA. Thus, the Court concludes that the term “spouse” in paragraph 160(1)(a) ITA also includes widows and widowers. Consequently, the assessment established under section 160 ITA was deemed valid and the widow of the deceased was liable to pay her deceased husband’s outstanding tax debt.

In the Enns case, the Court relied on the principle of judicial comity to reach the same conclusions as Justice Graham in the Kuchta decision. According to this principle, the Court must abide by its previous decisions in the absence of exceptional circumstances. Thus, the Court ruled that Mrs. Enns was the spouse of her deceased husband when his RRSP was transferred to her. As such, the CRA was entitled to assess Mrs. Enns in accordance with section 160 ITA, even though her husband was deceased. The decision has been appealed.

Beneficiary Designations in Quebec

It is important to note that, in Quebec, beneficiary designations are only possible in insurance products, annuity products and certain retirement plans. In such cases, a beneficiary can be named in the contract or in a will.

The advantage of this designation is that the money paid to the beneficiary does not form part of the deceased’s estate and is generally not available to the deceased’s creditors. Since it is not possible in Quebec to make a beneficiary designation on an RRSP, the right of the CRA, as a creditor of the deceased’s estate, to claim the deceased’s unpaid taxes from the registered plan beneficiary pursuant to section 160 ITA appears to be established under the Enns decision.

The Conclusion

As part of their estate planning, all taxpayers should ensure that they have the necessary liquidity in their estate to pay the taxes they owe at death. Otherwise, they should ensure that they have sufficient assets in their estate that can be sold to pay their tax liability.

One of the liquidator’s duties is to ensure that the estate is in good standing with the tax authorities before making distributions to the heirs. An estate in good standing with the tax authorities will avoid the liability of the surviving spouse in the event of a transfer of the deceased’s unmatured RRSP. Otherwise, if the estate owes a debt to the tax authorities, and the RRSP is transferred to the surviving spouse, the tax authorities will be able to claim their due from the surviving spouse under the Enns decision.


To open this article in a shareable format, click here.


1 2023 TCC 28.
2 The Federal Court of Appeal in Livingston v. R [2008] 3 CTC 230, established the criteria for determining in which situations subsection 160(1) ITA applies (paragraphs 17 to 19): 1) The transferor must have a tax liability under the ITA at the time of the transfer; 2) There must be a transfer of property, directly or indirectly, through a trust or any other means; 3) The beneficiary of the transfer must be: i. The spouse or common-law partner of the transferor at the time of the transfer or a person who has since become their spouse or common-law partner; ii. A person under the age of 18 at the time of transfer; or iii. A person with whom the transferor did not deal at arm’s length and 4) The fair market value of the property transferred must be greater than the fair market value of the consideration given by the transferee.
3 2013 TCC 60.
4 2015 TCC 289.

About the Author

Vanessa Sarveswaran

Vanessa Sarveswaran, LL.B, LL.M. FISC., TEP

Vice President, Tax, Retirement and Estate Planning
CI Global Asset Management

Vanessa is a tax specialist with a master’s in taxation and an estate planning lawyer called to the bar of Quebec in 2015. She specializes in tax planning for corporations and trusts as well as post-mortem and succession planning. She also provides tax advice to high-net-worth individuals. Vanessa is a member of the Association de planification fiscale et financière (APFF), the Canadian Tax Foundation (CTF), the Society of Trust and Estate Practitioners (STEP) and the Young Bar Association of Montreal and also performs volunteer work with the Clinique Juridique de Saint-Michel. Prior to joining CI GAM, Vanessa worked at a renowned tax law firm based in Montreal and at a major accounting firm. 


This communication is published by CI Global Asset Management (“CI GAM”). Any commentaries and information contained in this communication are provided as a general source of information and should not be considered personal investment advice. Facts and data provided by CI GAM and other sources are believed to be reliable as at the date of publication. Certain statements contained in this communication are based in whole or in part on information provided by third parties and CI GAM has taken reasonable steps to ensure their accuracy. Market conditions may change which may impact the information contained in this document. Information in this communication is not intended to provide legal, accounting, investment or tax advice, and should not be relied upon in that regard. Professional advisors should be consulted prior to acting based on the information contained in this communication.. You may not modify, copy, reproduce, publish, upload, post, transmit, distribute, or commercially exploit in any way any content included in this communication. You may download this communication for your activities as a financial advisor provided you keep intact all copyright and other proprietary notices. Unauthorized downloading, re-transmission, storage in any medium, copying, redistribution, or republication for any purpose is strictly prohibited without the written permission of CI GAM. CI Global Asset Management is a registered business name of CI Investments Inc. ©CI Investments Inc. 2023 All rights reserved. Published September 29, 2023