Mom is last to die. Her RRIF valuation at the date of death is reported on her final tax return as income. It took a few months before the paperwork was processed to pay out her RRIF to the beneficiaries. When Dad passed on, there was an inclusion in Mom’s income that was offset by a deduction to take advantage of a tax-deferred rollover of the RRSP or RRIF to a spouse or other qualifying beneficiary. In those months, the value of Mom’s RRIF dropped 20% due to market volatility. Mom was a bit of a risk taker, holding a portfolio of mutual funds, stocks and bonds. She wasn’t investing in GICs. No one realized that this loss would result in tax being payable on phantom income that would never be recoverable. What happened prior to ...

Subscribe to Canadian MoneySaver to read the entire article. Originally published November 2009 by Canadian MoneySaver - www.canadianmoneysaver.ca

Eileen Reppenhagen, CGA, ACG, Certified QuickBooks ProAdvisor, and Honorary Member of the Institute of Professional Bookkeepers of Canada, writes and speaks about accounting and tax.  She is a regular contributor to Canadian MoneySaver, The TaxLetter and Intuit Canada’s Advisor Advantage.   All articles are copyright protected.  Most articles are not available for re-print unless you obtain permission from third parties.  Please respect copyright. For more information or permission to re-print please contact  eileen@taxdetective.ca   If you obtain permisison to re-print an article, include this tagline:  "Eileen Reppenhagen, CGA is a Certified QuickBooks ProAdvisor and speaks and writes about accounting and tax.  Contact her at www.taxdetective.ca".