CANADA Trends and Developments Contributed by: Ian Hull, Suzana Popovic-Montag and Nick Esterbauer, Hull & Hull LLP
Conclusion While the federal government and Canadian courts have resumed normal operations post-pandemic, 2025 appears to be an outlier with respect to taxation. The government is currently prioritising tax relief for lower- and middle-income Canadians, but few sub - stantive tax measures have been proposed. Readers can expect further tax measures to be introduced in 2026. In terms of estate planning, two current trends are reviewed above. The first trend is inter vivos trans - fers of both land and financial assets, particularly gifts involving a right of survivorship, and how the presumption of resulting trust may apply to such transfers. The increasing prevalence of will clauses that authorise beneficiaries to purchase estate assets, rather than give assets to those beneficiaries outright, is another noteworthy trend. The increasing number of such will clauses suggests that testators are looking for alternatives to gifting assets to beneficiaries while still benefitting those individuals who survive them. Lastly, a noteworthy development for estate planners in Canada is the fact that RRSPs left to taxpayers’ spouses can no longer be clawed back by the CRA to cover any tax liabilities owed by the deceased’s estate. Rather, such assets will pass to the taxpayers’ spouses, as intended.
to RRSP transfers made to a deceased taxpayer’s sur - viving spouse. For the purposes of the Act, the court held that the surviving spouse technically ceases to be the taxpayer’s “spouse” upon the taxpayer’s death, because the marriage ends when one of the spouses dies. The parties are no longer related by marriage when the surviving spouse becomes entitled to the RRSP. However, a short time later, the Tax Court came to the opposite conclusion in Kuchta v The Queen (2015 TCC 289), holding that a surviving spouse was still the deceased taxpayer’s spouse for the purposes of Section 160 of the Act. In Enns v Canada (2025 FCA 14), this inconsistency was resolved by the Federal Court of Appeal, which confirmed that spouses – both by marriage and common-law partnerships – are not to be considered spouses upon the death of a taxpayer for the purposes of the Act. As a result, the RRSPs left by the deceased to his common-law partner in this case could not be used to satisfy the tax liability owed by the deceased’s estate. Because the surviving common-law partner was no longer recognised as the deceased’s spouse, the transfer was deemed to be made to a person at arm’s length from the deceased taxpayer. The Court of Appeal also confirmed that the RRSP could not be used to satisfy the deceased’s tax lia - bilities because it was distributed through a benefi - ciary designation and passed outside the deceased’s estate.
102 CHAMBERS.COM
Powered by FlippingBook