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

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.

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.

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!

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".

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.

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".

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.