Executive Summary: Key Legal and Evidentiary Issues

• Dispute centered on the interpretation of “spouse” under section 160(1)(a) of the Income Tax Act following the death of a spouse.

• CRA assessed Marlene Enns for her deceased husband’s tax debt after she received his RRSP as the designated beneficiary.

• The Tax Court had previously ruled she remained a “spouse” for the purposes of the Act despite his death.

• Federal Court of Appeal re-examined whether the marital relationship continues post-death for tax liability purposes.

• The definition and application of “common-law partner” under the Act was pivotal in the contextual analysis.

• Court concluded Parliament did not intend to extend spousal status beyond death under section 160, vacating the assessment.

Facts and outcome of the case

Background of the dispute

Marlene Enns was married to Peter Enns and lived in Alberta. Prior to his death, Peter named Marlene the sole beneficiary of his Registered Retirement Savings Plan (RRSP). When Peter died in May 2013, he had an outstanding tax debt exceeding the value of his RRSP, which was approximately $102,789.52. The RRSP passed directly to Marlene under the beneficiary designation, bypassing Peter's estate. The Canada Revenue Agency (CRA) assessed Marlene under section 160 of the Income Tax Act (ITA), holding her liable for the value of the RRSP due to her alleged status as Peter’s “spouse” at the time of transfer. The Tax Court upheld this assessment, citing an earlier decision in Kuchta v. The Queen, which treated widows as still being "spouses" for purposes of the Act.

Appeal before the Federal Court of Appeal

Marlene Enns appealed to the Federal Court of Appeal, arguing that she ceased to be Peter’s spouse upon his death and should not be liable under section 160. The appellate court focused its analysis on the proper legal interpretation of “spouse” in the context of section 160(1)(a), applying the textual, contextual, and purposive framework of statutory interpretation. It emphasized that both dictionary and legal definitions recognize that marriage ends at death, and thus a surviving spouse is no longer legally a “spouse.”

The court also considered the definition of “common-law partner” in subsection 248(1) of the ITA, which presupposes cohabitation in a conjugal relationship—something impossible once one partner has died. The court concluded that Parliament intended both marriages and common-law partnerships to end at death for tax purposes, especially in light of how other provisions in the Act treat survivors.

Conclusion and judgment

The Federal Court of Appeal allowed the appeal, ruling that Marlene Enns was no longer Peter’s “spouse” at the time of the RRSP transfer and therefore not liable under section 160. The court vacated the CRA’s assessment against her and awarded her costs for both the Tax Court proceedings and the appeal. This decision clarified that transfers on death to surviving spouses or partners fall outside the scope of section 160 unless Parliament explicitly provides otherwise.