2023-0967371C6 STEP 2023 - Q14 – s.70(6) & Application to Extend

Principal Issues: (A) What is the process for making a written application to extend the 36 month period for property to become vested indefeasibly with the surviving spouse or common-law partner, or a testamentary spousal or common-law partner trust? (B) What are some of the considerations that the legal representative should consider and document when asking for an extension?

Position: (A) There is no prescribed form for making a request. The legal representative should send a letter that clearly indicates they are requesting an extension to the 36 month period for the property to vest indefeasibly in the spouse or common-law partner, or testamentary spousal or common-law partner trust. (B) A written application should include details that provide the director of the legal representative’s tax services office with a clear picture of the reason for the extension request.

Author: King, William
Section: -

2023 STEP CRA Roundtable – June 20, 2023
QUESTION 14. Subsection 70(6) and the Making of a Written Application to Extend the 36 Month Period

Very generally, subsection 70(6) of the Act provides for capital property to be transferred on a tax-deferred (“rollover”) basis for income tax purposes, if certain conditions are met. One condition is that the deceased’s property vests indefeasibly with the surviving spouse or common-law partner, or a testamentary spousal or common-law partner trust:

“…if it can be shown, within the period ending 36 months after the death of the taxpayer or, where written application therefore has been made to the Minister by the taxpayer's legal representative within that period, within such longer period as the Minister considers reasonable in the circumstances, that the property has become vested indefeasibly in the spouse or common-law partner or trust, as the case may be…”

The T4011 Guide – Preparing Returns for Deceased Persons notes that if the legal representative needs more time to meet this condition, they can make a written request to the director at their tax services office before the end of the 36 month period.

Given the above, we have the following questions:

A. What is the process for making a written request and what should be included?

B. What are some of the considerations that the legal representative should consider and document when asking for an extension?

CRA Response

Part A

There is no prescribed form for making a request. The legal representative should send a letter that clearly indicates they are requesting an extension to the 36 month period for the property to vest indefeasibly in the spouse or common-law partner, or testamentary spousal or common-law partner trust. The information to be provided should include:

* the property(ies) transferred which require an extension of the 36 month period

* the parties involved (deceased, spouse or common-law partner, or testamentary spousal or common-law partner trust) and the relevant tax account numbers

* the legal representative’s contact information

* the reason for the unavoidable delay that is beyond the legal representative’s control, and

* if known, an anticipated date of resolution.

The request must be submitted before the end of the 36 month period; however, we recommend the request be submitted as soon as the delay is identified, along with documentation that supports the reason for the delay.

Part B

A written application should include details that provide the director of the legal representative’s tax services office with a clear picture of the reason for the extension request. Each situation is distinct and will be reviewed on a case-by-case basis based on the details provided. The CRA will consider the overall reasonableness of the extension request and whether the duration of the extension being requested is reasonable based on the barriers faced by the legal representative in having the property vest indefeasibly in the spouse, common-law partner or trust.

William King
2023-096737

Response prepared by:
Katharine Mattiozzi
Contact Centre - Individual and Benefits Enquiries

All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without the prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5.

© His Majesty the King in Right of Canada, 2023

Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistribuer de l'information, sous quelque forme ou par quelque moyen que ce soit, de façon électronique, mécanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.

© Sa Majesté le Roi du Chef du Canada, 2023