Thursday, November 27 | 22:58 PM

RRSPs & RRIFs

Donating Registered Assets such as a Registered Retirement Savings Plan (RRSP) or a Registered Retirement Income Fund (RRIF) is an effective way to reduce the taxes payable by the donor’s estate.


RRSPs and RRIFs often create large tax liabilities for a taxpayer in the year of death, since the entire amount of the plan is included in the taxpayer's income in one year.If a donor’s RRSP or RRIF has the Ontario SPCA as the direct beneficiary, the donor’s estate will receive a donation receipt for the entire value of the plan. The credit arising from this donation will offset the tax liability.As a result, the entire value inside an RRSP or RRIF can be given to a registered charity in the year of death with no tax implications. A gift of a RRSP or RRIF may enable the donor to fulfill dual goals of supporting Ontario SPCA while reducing the amount of taxes that their estate would otherwise have to pay.

Benefits of a Gift of Registered Assets

  • Tax Advantages – Tax-effective means of supporting Ontario SPCA. The donor’s estate may claim gifts in the years of death equal to 100% of net income in that year and the preceding year.RRSPs and RRIFs become fully taxable as income in the year of death, usually at the highest marginal tax rate, unless the funds can be rolled over to a surviving spouse or a dependant child.
  • Control – The donor retains the use of the investment for the duration of their lifetime.
  • Simple – Easy to arrange.The donor can ask their financial institution to change the beneficiary designation to the Ontario SPCA.
  • Flexible – The designation is revocable and can be changed if the donor’s financial circumstances alter.
  • Cost Effective – There are no extra out-of-pocket costs.
  • Eliminates Probate, Legal & Executor Fees – The gift will not be subject to probate costs or delays in settlement. The full proceeds are payable to the Ontario SPCA upon the donor’s death.
  • Peace of Mind – The donor can plan, arrange and announce the gift themselves and they will know that it will occur just as planned.
  • Control – A donation of registered assets is not a matter of public record allowing the donor to remain anonymous. And unlike a Will, the gift cannot be contested.
  • Memorialize – The bequest can create a lasting memorial for the donor, their family or anyone you they wish to honour.
  • Opportunity – An opportunity to make a significant gift.
  • Recognition – The gift can be honoured during the donor’s lifetime.


How does it work?
There are two ways to donate the proceeds of an RRSP or RRIF:

  • The donor can name the Ontario SPCA as the direct beneficiary of their RRSP or RRIF. Upon death, the proceeds will be paid directly to the Ontario SPCA without going through probate.
  • The donor can name their estate as the beneficiary of their RRSP or RRIF and leave instructions in their Will to donate all or part of their RRSP or RRIF to the Ontario SPCA.The donor can specify a percentage of the RRSP or RRIF or a specific dollar amount to be donated. The donation qualifies for the charitable Will bequest donation tax credit for up to 100% of income in the year of death and in the year preceding.


Note: The trustee of the donor’s RRSP or RRIF will withhold taxes and probate will apply when choosing this option.



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