Enns v. Canada, 2025 FCA 14: When is a Spouse Is No Longer a Spouse?
Can the Canada Revenue Agency (“CRA”) hold a surviving spouse personally liable for a deceased partner’s unpaid taxes simply because the survivor received the proceeds of the deceased’s registered retirement savings plan (“RRSP”)?
In Enns v. Canada, 2025 FCA 14 [Enns], the Federal Court of Appeal decided no. The Court ruled that a widow was no longer her deceased husband’s legal “spouse” when she received his RRSP proceeds as a designated beneficiary. As a result, paragraph 160(1)(a) of the Income Tax Act, R.S.C., 1985, c. 1 (5th Supp.) could not be relied upon to assess her for his tax debt.
This is a key decision regarding the application of section 160, how registered plans are handled after death, and limits on CRA’s collection powers. The ruling also settles the Tax Court of Canada’s varying decisions on whether a surviving partner legally remains a “spouse” under the provision.
The Facts: An RRSP Inheritance and a Six-Figure Assessment
A husband and wife resided in Alberta. When the husband passed away, he owed more than $102,000 in income taxes. However, he had named his wife as the sole beneficiary of his $102,789.52 RRSP.
Because she received the funds directly as a designated beneficiary, the money bypassed his estate entirely and rolled over into her own locked-in retirement account. However, applying section 160, CRA assessed her for the full $102,789.52.
The core issue was whether she was still considered a “spouse” under paragraph 160(1)(a) after he passed. The Tax Court of Canada previously ruled yes in Enns v. The King, 2023 TCC 28.
Understanding Section 160
If a taxpayer with a tax debt transfers property for less than fair market value to a non-arm’s-length person (such as a family member), the recipient can be held jointly and severally liable for the tax debt, up to the value of the property received.
The CRA argued that the wife was a spouse of the deceased at the exact moment she collected the RRSP proceeds. Whether a transfer occurs during someone’s lifetime versus after their death turned out to be the ultimate point of contention.
Resolving Tax Court Division: Kiperchuk vs. Kuchta
Before Enns, the Tax Court was deeply divided on this exact question:
- In Kiperchuk v. The Queen, 2013 TCC 60, the court held that a person stops being a spouse the moment they die. Therefore, the required spousal relationship didn’t exist when the survivor received the proceeds from the RRSP.
- In Kuchta v. The Queen, 2015 TCC 289, the court ruled that “spouse” could include a widow or widower based on a purposive reading of the respective law.
The Federal Court of Appeal’s Reasoning
Justice Webb, writing for the unanimous Court, allowed the wife’s appeal using a standard textual, contextual, and purposive analysis.
- The Legal Meaning of “Spouse”: A spouse is someone married to a living individual. Marriage ends at death, meaning the survivor is no longer a spouse in the legal sense. While people casually say “widow” or “widower,” conversational habits don’t override strict statutory definitions.
- The Logic of “Common-Law Partner”: The Act defines common-law partners as people cohabiting in a conjugal relationship. Since two people cannot cohabitate after one dies, Parliament clearly didn’t intend for the status to linger post-mortem. Both terms—spouse and common-law partner—had to be interpreted consistently.
- Purpose Doesn’t Equal Expansion: The Crown argued that section 160’s broad anti-avoidance purpose meant the rule had to apply to prevent assets from escaping collection. The Court disagreed, noting that just because a law has a broad purpose doesn’t mean courts can rewrite words past their actual legal limits.
- Harsh Practical Realities: If the wife had to rely upon the RRSP income to pay the CRA’s assessment, she would first trigger a large income tax bill on the withdrawal. The Court noted it was unlikely Parliament intended double-taxation in this manner.
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Disclaimer
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