Greg A. Leslie, “Trusts — Be Mindful of Allocating Deemed Income!”, Tax Hyperion 13:11 (November 2016) summarizes CRA technical interpretation 2015-0604971E5 (October 19, 2016). How does a trust allocate a deemed gain under s 48.1 of the Income Tax Act…
Trust that avoids 21-year rule subject to GAAR
An inter vivos trust is approaching its 21-year anniversary. Before the anniversary, the trust distributes property under 107(2) to Canco, a corporate beneficiary, which is wholly-owned by another inter vivos trust. The other trust was just formed, and so it…
Important safety tip
Neal Armstrong alerts us to a nasty trap. Suppose Opco pays a dividend to a trust-shareholder, which immediately distributes an amount to Holdco, a beneficiary of the trust. Suppose that the trust then sells its shares of Opco, before the…
Estates vs Trusts Coda
As a coda to my article on “trusts vs estates”, I offer the following from Chow and Pryor, Taxation of Trusts and Estates (Toronto: Carswell, 2016) at 9.2.2(c)(ii): The residue is not ascertained until the debts and other liabilities of…
US grantor trust
Neal Armstrong notes that the CRA continues to maintain that a US grantor trust is not a bare trust for Canadian tax purposes. See his summary of the CRA response to question 10 at the 2016 STEP conference.
Crystallizing and estate planning
Is it always a good idea to take full advantage of the capital gain exemption (CGE) by crystallizing? Assume Ms X crystallizes her Opco shares, but Opco morphs into an investment holding company by the time of her death. In…
Estates vs Trusts
The following article appeared in the most recent edition of The Hamilton Law Association Journal.
What is the difference between an estate and a trust? And why does it matter for tax purposes?
Spousal trust cannot be a GRE
The CRA, in technical interpretation 2014-0553181E5F (June 25, 2015), says that a spousal trust cannot be a “graduated rate estate” for the purposes of the Act.
Alberta trust vindicated
What does it take to make an Alberta trust “work” in light of Fundy Settlement v Canada, 2012 SCC 14? From Colin Poon, “Interprovincial Tax Planning Using Trusts Upheld”, Canadian Tax Focus 5:3 (August 2015) re Discovery Trust v Canada…
New trust rules
Natalie Woodbury, “Testamentary Trusts: The New Rules” (2015) 63:1 Canadian Tax Journal 269-89 is a clear summary of the new rules relating to testamentary trusts and life-interest trusts. The author asks whether the new rules will lead to an increased…