23 What are the spousal rollover provisions and why do they exist?

Simran Gill

A spousal rollover is the transfer of retirement funds (RRSPs/ RRIFs) and/or capital property to a spouse, common-law partner or to a trust for a spouse or common- law partner.  This can be a transfer between living partners (“inter vivos”) covered under ITA 73(1), or it can be a transfer upon death of one of the partners which is covered under ITA 70(6).  The goal of these spousal rollovers is that the transfers can occur with no immediate tax consequences.

Note, for purposes of this discussion, spouse, common-law partner and trust will be referred to jointly as “spouse”.

Property Transfers

The basic idea under ITA 70(6) and ITA 73(1) is as follows:

  • The original ACB and UCC of the assets transfer to the receiving spouse.
  • The spouse must be resident in Canada when the property is transferred
  • the spousal rollover is automatic
  • You need to file paperwork to elect out of these rules if you don’t want them to apply.  You might do this if, for example, you wanted a capital gain on the transfer to be triggered to utilize some available capital losses

This results in the receiving spouse being able to defer any capital gains or recapture until they die or sell the property. The transfer itself does not generate a capital gain or loss, recapture, or terminal loss.

Let’s look at an example.  Assume Kim has depreciable assets with a FMV of $70,000 an ACB of $50,000 and a UCC of $40,000.  If she sold these assets to a 3rd party she would likely trigger a $20,000 capital gain ($70,000 – $50,000) and $10,000 in recaptured depreciation ($50,000 – $40,000).   If Kim transfers these same assets to her husband Kanye, the spousal rollover provisions allow these assets to transfer at their original ACB and UCC with no immediate tax consequences.

Note that income, gains or losses on these transferred assets may need to be recorded in the hands of the transferring spouse (i.e. Kim) when the income is received or the gains/losses realized in the future.  This will be discussed in the section on attribution.

It is possible that Kim could have a bunch of non-capital and net-capital losses that she wants to utilize, in which case Kim and Kanye could jointly elect out of 73(1), in which case this would be treated as a non-arm’s length transaction rules under 69(1).

Inadequate Considerations

As mentioned above, the 69(1) rules apply if the spouses ‘elect-out’ of the spousal rollover rules in 70(6) or 73(1).  In this case the transfer is treated like any other non-arms length sale.

Here are the tax rules for FMV transfers (as explained in ITA 69):

ITA 69: Non- Arm’s Length Transfers

Transfer Price

Adjusted Cost Base for Transferee

Proceeds of Dispositions For Transferor




Above FMV:


Actual Proceeds

Below FMV:

Actual Proceeds


Gift (NIL):



Interactive content (Author: Jacob Stanworth, January 2020)

Interactive content (Author: Yasi Lu, January 2020)

References and Resources:

January 2020


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