2014-0523091C6 STEP CRA Roundtable – June 2014

Principal Issues: Can the rollover provisions of subsection 70(6) apply to a transfer of property to a taxpayer’s spouse and transfer of another property to a common-law partner?

Position: Yes, provided all the conditions in subsection 70(6) are met.

Reasons: It is possible that a person could be legally separated and have a common-law partner at the same time.

Author: King, William
Section: 70(5); 70(6); 70(6.2); 248(1); 248(8); 252(3)

STEP CRA Roundtable – June 2014

QUESTION 1.  Transfer to Spouse and Common-Law Partner

A rollover is available under subsection 70(6) where property is left by a taxpayer resident in Canada to a taxpayer’s spouse or common-law partner who is resident in Canada immediately before the taxpayer’s death.

The term spouse is not defined in the Act, but is taken to mean a person to whom one is legally married.  A common-law partner is defined in subsection 248(1) to be a person with whom one cohabits in a conjugal relationship and has either so cohabited for a period of at least one year or is the parent of a child of that person. 

It would seem possible for a person to have both a spouse and a common-law partner at a given time.  In this case, can the rollover provision of subsection 70(6) be applied in respect of a transfer to the spouse and also to the common-law partner?

CRA Response

Where certain conditions are met, subsection 70(6) provides a tax-free rollover to a taxpayer’s spouse or common-law partner who was resident in Canada immediately before the taxpayer’s death or to a trust for the spouse or common-law partner created by the taxpayer’s will.  Subsection 70(6) specifically refers to “any property of a taxpayer” and as such, the rules in subsection 70(6) would be applied on a property-by-property basis.

It is possible that a taxpayer could have a spouse and a common-law partner at the same time, for purposes of the Act.  For example, in document 2010-0373901I7 the CRA addressed a scenario where a taxpayer was legally separated but not divorced and had a common-law partner at their death.  We were asked, in part, whether paragraph 70(6)(a) would apply to two properties of which one property was bequeathed to the deceased taxpayer’s spouse (separated but not divorced) and another property was bequeathed to the deceased taxpayer’s common-law partner.  Provided all the conditions in subsection 70(6) are met in respect of the deceased taxpayer and the spouse or common-law partner, the subsection would apply to the property transferred to each of the spouse and common-law partner.

William King
2014-052309

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