Income Tax Act — I-3.3 146.6
ficiary’s income for the year. Deemed transfer or distribution (15) If an amount is received at any time from the FHSA of a deceased holder by the holder’s legal representative and a survivor of the holder is entitled to all or a portion of the amount (in this subsection referred to as the “survivor’s amount”) under a decree, order or judgment of a competent tribunal or under a written agreement (provided that the entitlement relates to the survivor’s rights or interests in respect of property as a result of marriage or common-law partnership), or as a person beneficially interested under the deceased’s estate, the following rules apply: (a) if a payment is made from the estate to a FHSA, RRSP or RRIF of the survivor, the payment is deemed to be a transfer from the FHSA to the extent that it does not exceed the survivor’s amount and it is so designated jointly by the legal representative and the survivor in prescribed form filed with the Minister; (b) if a payment is made from the estate to the survivor, the payment is deemed for the purposes of subsection (14) to have been received by the survivor as a beneficiary to the extent that it does not exceed the survivor’s amount and it is so designated jointly by the legal representative and the survivor in prescribed form filed with the Minister; and (c) for the purposes of subsection (14), the amount distributed to the legal representative from the FHSA is deemed to be reduced by the amounts designated in paragraphs (a) and (b). Arrangement ceasing to be a FHSA (16) An arrangement that was filed with the Minister as a FHSA ceases to be a FHSA at (a) subject to paragraph (b), the earliest of the following times: (i) the end of the maximum participation period of the last holder, (ii) the end of the year following the year of the death of the last holder, (iii) the time at which the arrangement ceases to be a qualifying arrangement, or (iv) the time at which the arrangement is not administered in accordance with the conditions in subsection (2); or (b) a later time specified by the Minister in writing. Rules applicable on FHSA cessation (17) If an arrangement ceases at a particular time to be a FHSA, (a) subsections (3) and (3.1) do not apply in respect of that arrangement after the particular time; (b) if the taxpayer who was the last holder under the arrangement is not deceased at the particular time, an amount equal to the fair market value of all the property of the arrangement, determined at that time, is deemed for the purposes of subsection 146.6(6) to be received at that time by the taxpayer out of or under the FHSA; (c) if the last holder is deceased at the particular time, the proportion of the fair market value of all the property of the arrangement that a beneficiary is entitled to, determined at that time, is deemed for the purposes of subsection 146.6(14) to be distributed at that time from the FHSA to the beneficiary; (d) if the arrangement governs a trust, (i) the trust is deemed to have disposed, immediately before the particular time, of each property held by the trust for proceeds equal to the property’s fair market value immediately before the particular time, (ii) the trust is deemed to have acquired, at the particular time, each such property at a cost equal to that fair market value, (iii) the trust’s last taxation year that began before the particular time is deemed to have ended immediately before the particular time, and (iv) a taxation year of the trust is deemed to begin at the particular time; and (e) if the arrangement is a deposit or contract, (i) the arrangement is deemed to have been disposed of immediately before the particular time for proceeds equal to its fair market value immediately before the particular time, (ii) if the arrangement is an annuity contract, the contract is deemed to be a separate annuity contract issued and effected at the particular time otherwise than pursuant to or as a FHSA, and (iii) each person who has an interest or, fo