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If a Registered Retirement Income Fund (RRIF) beneficiary is not a spouse or common-law partner, or a financially dependent child or grandchild, the entire value of the RRIF will be subject to tax.

The tax implications for a non-spouse or dependent RRIF beneficiary are similar to that of an RRSP. The entire value of the RRIF must be included in the final tax filing of the deceased person and reported as income. Who pays this tax and the tax on additional payments from the RRIF – the beneficiary or the estate – depends on different factors. Generally though, the beneficiary will receive their share of the RRIF after taxes. Speak to a tax expert or estate planning expert to ensure you understand the implications.

The Canada Revenue Agency’s publication, Death of a RRIF Annuitant, has information on what happens to a RRIF after death.