When would a withdrawal from a Spousal RRSP be taxed in the spouse annuitant’s hands?

There are a number of instances when the withdrawal would be taxed in the spouse annuitant’s hands:

1)    If the higher income contributor has not made a contribution in the year of the withdrawal nor the preceding two years, then withdrawals will be taxed in the hands of the spouse annuitant.

2)    The anti-avoidance rules do not apply in the case where you and your spouse were living separately due to a breakdown of your relationship at the time the spouse annuitant withdrew monies from the Spousal Plan.

3)    In the event that the spouse annuitant made a withdrawal in the year of the death of the higher income contributor.

4)    If you and your spouse are not resident in Canada at the time of the withdrawal.

5)    The Spousal RRSP has been converted into a retirement income (a Registered Retirement Income Fund (RRIF), Annuity, etc.) and the annuitant spouse receives only the required regular minimum annuity payments provided for by law. For example, if the Spousal RRSP is converted to an RRIF account and the higher income contributor has made contributions in any of the three prior years, the annual minimum RRIF payments required by law will not be attributed back to the higher income contributor. But any amount in excess of the annual minimum will be taxed in the hands of the higher-income contributor.

6)    If the higher income contributor dies in the year that the withdrawal was made by the spouse annuitant the withdrawal is not taxed to the deceased.

7)   In the event that the annuitant Spouse has died.

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