The CRA believes that a dividend paid to a trust that is then paid to an individual during a year is not allocated until the end of the year (ie December 31 for inter vivos trusts) (CRA technical interpretation 2016-0647621E5, June 3, 2016). Does this mean that, if the individual dies before December 31, the dividend should be treated as having been received by the individual’s estate? The CRA—perversely, according to the authors—seems to believe that the dividend should still be treated as received by the individual because the individual’s terminal taxation year continues to December 31! (CRA technical interpretation 2020-0839891C6, November 26, 2020) This despite the CRA, in its T3 guide, stating that income earned after the date of death of an individual should be reported by his or her estate.
David Carolin and Manu Kakkar “Estate Plans, Trusts, and Dividends: More Anomalies” Tax for the Owner-Manager 21:2 (April 2021)
