RRSP Beneficiaries and Tax Liabilities

Financial Institutions issuing RRSPs or RRIFs cannot withhold or remit taxes when paying out proceeds from a deceased person’s RRSP or RRIF. If you are the sole beneficiary named on an RRSP or a RRIF (presuming it is not being rolled over), Canada Revenue Agency can hold you responsible for the tax liability, because you and the deceased’s estate are jointly liable for it.

While CRA typically assesses the tax to the deceased’s estate first and only goes after the beneficiary if the estate is out of money, they are not actually required to do so by the Income Tax Act.

RRSP/RRIF beneficiaries should obtain confirmation that the payment to the executor of an estate is a payment of tax, or issue the cheque payable to Receiver General directly. Professional tax advice should be sought before making any payments, whether to the estate or to CRA.

Source: Jamie Golombek. “When an RRSP beneficiary faces a tax liability.” Accessed August 1, 2017.  http://www.advisor.ca/retirement/retirement-news/when-an-rrsp-beneficiary-faces-a-tax-liability-217787

Did you know you can now pay your taxes at Canada Post? For a fee, of course.

You can now use cash or debit card to pay certain balances owing to the CRA (e.g. personal tax, source deductions, corporate tax, GST/HST, and others) at any Canada Post outlet – for a fee. You will also require a self-generated quick response (QR) code which will provide CRA with personalized information in order for them to credit the appropriate account. Canada Post uses a third party service provider to create the QR code: https://www.payinperson.ca/cra.

You can pay up to $1,000 per transaction, and there will be a $3.95 fee for each transaction to cover the third party service provider’s expenses.

For more information, see: https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/pay-canada-post.html.