An Alberta widow has won a pivotal court battle against the Canada Revenue Agency (CRA), securing her right to keep tens of thousands of dollars in retirement savings left by her late husband.
The Federal Court of Appeal ruled Tuesday that Marlene Enns is exempt from a clause in Canadian tax law allowing the CRA to collect unpaid tax debts from spouses in certain cases. The court clarified that her marriage ended at the moment of her husband Peter’s death, exempting her from the legal definition of “spouse” under Section 160 of the Income Tax Act.
“A person is only a ‘spouse’ for the period during which that person was married and, therefore, when a marriage ends, a person ceases to be a ‘spouse’,” the judge wrote.
This landmark ruling resolves years of legal uncertainty, as previous Tax Court decisions had conflicting interpretations of “spouse” in cases involving widows and tax debt.
The CRA sought to recover the $102,789 Peter Enns left to Marlene in his RRSP to settle his nearly $150,000 in unpaid income taxes. However, the appeal court ruled that the CRA could not use Section 160 to hold Marlene accountable, noting that the clause was designed to prevent tax evasion through property transfers but unfairly penalized recipients like Marlene.
The decision was praised by legal experts as a win for widows, taxpayers, and fairness in Canadian tax law. Marlene’s lawyer, Chad Brown, highlighted the inequitable consequences of the CRA’s actions, which would have left widows like Marlene worse off by taxing both the inheritance and the RRSP withdrawal.
The CRA has not commented on the ruling.
Source: Swifteradio.com
