70(2) rights and things pension received in month of death. | Income tax filing | Discussion forum

Please consider registering
guest

sp_LogInOut Log In sp_Registration Register

Register | Lost password?
Advanced Search

— Forum Scope —




— Match —





— Forum Options —





Minimum search word length is 3 characters - maximum search word length is 84 characters

No permission to create posts
sp_Feed Topic RSS sp_TopicIcon
70(2) rights and things pension received in month of death.
April 22, 2023
11:36 am
anita555
Member
Members
Forum Posts: 33
Member Since:
January 17, 2021
sp_UserOfflineSmall Offline

I understand that under certain circumstances, amounts can be included in an optional 70(2) rights and things return in the year of death , instead of being reported in the final return 70(1).

I see were the cra clearly mentions that oas and ccp for the month of death can be reported in either the final return or the rights and things return.

My question, with answere referenced in writing in an IT or information circular or ??,

CAN THE MONTHLY PENSION THAT THE INDIVIDUAL WAS RECEIVING SINCE RETIREMENT, BE REPORTED IN THE RIGHTS AND THINGS RETURN 70(2), FOR THE MONTH OF DEATH.

The individual received the monthly amount at the end of the month, in the month of death.

Thanks in advance for anyone who can provide a referenced answer. Thanks.

April 22, 2023
11:46 am
AltaRed
BC Interior
Member
Members
Forum Posts: 3018
Member Since:
October 27, 2013
sp_UserOfflineSmall Offline

Annuity payments already earned, but not yet received at date of death, can go into a rights and things return. The most common is CPP and OAS. DB pension payments if paid retrospectively at the end of the month, rather than in advance at the beginning of the month, also qualify. It would appear from post #1 that it would qualify.

April 22, 2023
1:04 pm
Norman1
Member
Members
Forum Posts: 6899
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

The full list is at Return for rights or things.

If one decides to file that return, one has to report all the "rights or things" on that return and cannot report some "rights or things" on the final return and some on the rights and things return.

April 22, 2023
1:09 pm
anita555
Member
Members
Forum Posts: 33
Member Since:
January 17, 2021
sp_UserOfflineSmall Offline

Thank you Norman1 and AltaRed for your comments.
I want to believe that the DB pension monthly amount in the month of death can go into the rights and things return, just wish that cra would specifically say that somewhere.

April 22, 2023
2:10 pm
Bill
Member
Members
Forum Posts: 3967
Member Since:
September 11, 2013
sp_UserOfflineSmall Offline

Norman1's link indicates "old age security (OAS) benefits that were due and payable before the date of death" (i.e. not after) can be included in rights and things return. (When do monthly OAS payments become "due"? When "payable"?)

70(1) deals with payments received after death. And if, as Norman1 says, the link has the full list, well I don't see monthly pension plan payments listed. Or CPP.

But 70(1) includes amounts from "annuity", and the 248(1) ITA definition says that's "an amount payable on a periodic basis whether payable at intervals longer or shorter than a year and whether payable under a contract, will or trust or otherwise". Or 70(1) also includes an "other amount payable periodically". Either way, monthly pension plan payments seem to fit into 70(1), seems to me.

So, yes, it would be nice if they would clarify why monthly pension plan payments are not on the list (maybe the list is not complete, though they seem to indicate it is).

But monthly pension plan payments are also not listed in their sample exclusions. So I'd probably just include the pension plan payment on the rights and things return, seems clearly to fit the wording of 70(1), and see what they do.

April 22, 2023
3:47 pm
Norman1
Member
Members
Forum Posts: 6899
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

What were those monthly amounts exactly?

Have a look at the slips for the payments. Were they payments from a registered pension plan, payments from an annuity contract, or payments from an RRSP that matured to an annuity?

A registered pension plan is not really an annuity contract.

April 23, 2023
7:26 am
anita555
Member
Members
Forum Posts: 33
Member Since:
January 17, 2021
sp_UserOfflineSmall Offline

The amount in question is from a registered pension plan (retirement pension from work in previous years with Canada Post)

April 23, 2023
7:40 am
AltaRed
BC Interior
Member
Members
Forum Posts: 3018
Member Since:
October 27, 2013
sp_UserOfflineSmall Offline

I would include a RPP payment earned for the month but not yet paid in the 70(2) return just like I would a CPP payment. Let CRA dispute it.

I included my mother's last CPP payment in a 70(2) return back in 2015 and CRA didn't say boo. Worst case is CRA would re-allocate it to the Final T1 and re-issue the NOA (if already issued).

Tip: Include the Final T1 Return and 70(2) return in the same envelope. They will both go to the same CRA processor and they will re-allocate if necessary. All these 'estate' type returns go to the Estate dept of CRA anyway.

April 23, 2023
8:12 am
Bill
Member
Members
Forum Posts: 3967
Member Since:
September 11, 2013
sp_UserOfflineSmall Offline

I agree 100%, as I said the ITA redefines "annuity" for its purposes, this is also "another amount paid periodically", so to me this Canada Post pension payment qualifies.

Unfortunately, AltaRed, it appears a rights and things return has to be paper filed! sf-wink

April 23, 2023
9:18 am
AltaRed
BC Interior
Member
Members
Forum Posts: 3018
Member Since:
October 27, 2013
sp_UserOfflineSmall Offline

So does a Final T1 return. They both go in the same envelope. Of the 5-6% of T1 returns still filed by paper to CRA, I speculate about 300k of them are 70(1) Final T1 returns and 70(2) Rights and Things returns.

I suspect that will never change given the uniqueness and wide range of issues pertaining to those returns.

April 23, 2023
9:23 am
anita555
Member
Members
Forum Posts: 33
Member Since:
January 17, 2021
sp_UserOfflineSmall Offline

Based on everyone's comments, I am feeling better in including the rpp amount for the month of death in the 70(2) return.
Thanks all for your comments.

April 23, 2023
9:31 am
Bill
Member
Members
Forum Posts: 3967
Member Since:
September 11, 2013
sp_UserOfflineSmall Offline

"The final return can be E-filed or paper filed", per CRA.

April 23, 2023
9:32 am
Norman1
Member
Members
Forum Posts: 6899
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

anita555 said
The amount in question is from a registered pension plan (retirement pension from work in previous years with Canada Post)

If the deceased was entitled to that final monthly registered pension plan payment by just being alive at the start of the month, then that payment is a "right or thing" unless it is specifically excluded.

That section 70(1) "other amount payable periodically" can't mean what it seems to mean. Bond interest payments are contractually periodic. But, they can be a "right or thing" in certain cases.

A better explanation is from accountant Jamie Golombek in Optional returns can lower the final owe:

…The CRA responded, quoting its Interpretation Bulletin IT-212R3, "Income of Deceased Persons - Rights or Things", which defines rights or things as including "amounts that have been earned but have not been included in income ..". For the pension payment to be properly considered a right or thing, "the deceased must have had a clear right to the amounts at the time of death".

If the deceased had fully earned the legal right to that month-end pension payment before passing away, then that payment is a "right or thing".

That's not the case with savings account end-of-the-month interest payments. One doesn't fully earn that month-end interest payment until the end of the month or, in some cases, the day before that last day of the month. If one passes away in the middle of the month, one has not fully earned the next month-end interest payment yet. So, that interest payment is not a "right or thing".

April 23, 2023
9:50 am
AltaRed
BC Interior
Member
Members
Forum Posts: 3018
Member Since:
October 27, 2013
sp_UserOfflineSmall Offline

Bill said
"The final return can be E-filed or paper filed", per CRA.  

Ah ok. I was thinking Netfile. I've never relied on an accountant to Efile anything so am not up on those processes.

April 23, 2023
10:30 am
Bill
Member
Members
Forum Posts: 3967
Member Since:
September 11, 2013
sp_UserOfflineSmall Offline

I've been rereading 70(1), which has no application to rights and things, it just deals with accruals to date of death and then the rest is the estate's income. It's 70(2) that deals with rights and things, and right off the hop it excludes anything falling into 70(1) - ?? (And IT-212R3 reinforces this when it says "Rights or things do not include, for example, ..........the accrued portion of periodic payments.")

So I quit, ignore what I've said, I'll leave it to the experts.

IT-212R3 does say "Where there is genuine doubt about whether income earned before a taxpayer's death is a periodic payment or a right or thing, its treatment is generally resolved in favour of the taxpayer." To me that's CRA saying even we don't really understand this stuff (and maybe that's why the IT is archived and their web page on the matter is unclear) so we'll let you have it either way.

April 23, 2023
1:09 pm
Norman1
Member
Members
Forum Posts: 6899
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

There has to be "genuine doubt" not just "doubt". Taxpayer lost in Succession Gustave Mercure v. The Queen, 2003 TCC 655 (CanLII) because of that.

I agree. This thing about "rights or things" is convoluted.

Subsections 70(1) and 70(2) are poorly drafted. I suspect (1) what is a "right or thing" and (2) when the "right or thing" is allowed to be reported on the "rights or things" return have been established by court cases and CRA decisions rather than just the text in those subsections.

Many of the explanations I found using Google are also poor. The explanations fail explain why periodic bond interest, for example, can be a "right or thing" sometimes and sometimes not.

Bond interest seems to be an allowable "right or thing" when the cheque or coupon for the interest is dated before date of death and the deceased just was not able to cash it before passing away. Not an allowable "right or thing" when the cheque or coupon for the interest is dated after date of death.

What were they thinking when they came up with that!

April 24, 2023
10:38 am
Norman1
Member
Members
Forum Posts: 6899
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

Norman1 said
The full list is at Return for rights or things.

 

I take that back. That is not a full list.

For example, CPP and QPP payments for the month of death are in their Chart 1 - Returns for the year of death but not in the list.

Also not in the list are retroactive correction pension plan payments. A November 2006 Tax Directorate advanced ruling agreed that a lump sum pension plan payment received after date of death, to correct previous monthly payments that were miscalculated, was an allowed "right or thing".

May 8, 2023
4:45 am
Jimmy
Member
Members
Forum Posts: 33
Member Since:
August 5, 2022
sp_UserOfflineSmall Offline

AltaRed said
So does a Final T1 return. They both go in the same envelope. Of the 5-6% of T1 returns still filed by paper to CRA, I speculate about 300k of them are 70(1) Final T1 returns and 70(2) Rights and Things returns.

I suspect that will never change given the uniqueness and wide range of issues pertaining to those returns.  

Wasn't there a different filing date requirement for the 70(2) return? I thought there was something along the lines of 90 days after the final return is assessed or reassessed.

May 8, 2023
6:47 am
AltaRed
BC Interior
Member
Members
Forum Posts: 3018
Member Since:
October 27, 2013
sp_UserOfflineSmall Offline

Jimmy said

Wasn't there a different filing date requirement for the 70(2) return? I thought there was something along the lines of 90 days after the final return is assessed or reassessed.  

I do not recall BUT it would make no sense to have a different filing date since that would simply confuse and complicate matters excessively. Since one is going to be allocating tax slips between the Final T1 return (which is a 70(1) return) and a Rights and Things 70(2) return, why would anyone want to file them separately and/or have a different filing date? I would avoid separate filing dates like the plague.

May 8, 2023
8:19 am
Bill
Member
Members
Forum Posts: 3967
Member Since:
September 11, 2013
sp_UserOfflineSmall Offline

Gov't site says:
You have to file this return by the later of:

90 days after the CRA sends the notice of assessment or reassessment for the final return,

one year after the date of death

No permission to create posts

Please write your comments in the forum.