A and B each contribute a portfolio of securities to a joint spousal trust, and subsection 75(2) of the Income Tax Act (Canada) applies to each of A and B in respect of their contributions. The CRA takes the position…
Taxation year-end of a trust that has dissolved
The taxation year of a GRE ends at the time it is terminated (all of its assets are distributed) during a year. See paragraph 249(1)(b) and subsection 249(5) of the Income Tax Act (Canada) (the “Act”). On the other hand,…
More good times with TOSI
The CRA confirmed that multiple businesses run by a husband and wife where they work fewer than 20 hours per week in each business would not be “excluded businesses” under the “bright line test” for substantial involvement. The CRA wrote…
Filing elections electronically
The CRA has made the T217, T2 Sch 89 and T2054 available for electronic filing. The T2057, T2058 and T2059 will be available online by March 1, 2023. The remaining election forms will be digitized over the next few years,…
Trusts and acquisitions of control for 88(1) bump purposes
The CRA confirmed the position it took in ruling 2009-0350491R3 regarding an alter ego trust that owned two corporations. On the death of the settlor of the trust, it was required to transfer the shares of one corporation to the…
Trust loans to beneficiaries and debt forgiveness
Consider a trust that loans money to a beneficiary, who uses the loaned funds for investment purposes. If the trust later transfers the loan to the beneficiary as a distribution of capital, it will be considered to have forgiven the…
Payment of Tax Over 10 Years for a Deceased Taxpayer
An executor can elect under subsection 159(5) to pay the tax owing under 70(2) (rights and things) and 70(5) and (5.2) (the deemed disposition on death). The election form (T2075) must be filed twice, once with the terminal return and…
Trusts and acquisitions of control
The CRA was asked to consider a situation where a trust owns all of the issued shares of a corporation. Would there be an acquisition of control in the following scenarios? The CRA reponse is given in all capitals. (a)…
104(21) and 104(21.2) Interaction
Suppose a trust has gains that can be sheltered with the capital gain exemption and gains that cannot. In that case, it will be impossible to allocate all of the eligible gains to one beneficiary because of the formula in…
The CRA and ‘reasonableness’
The taxpayer in Howard v Canada (Attorney General), 2022 FC 1673, over-contributed to her TFSA. The CRA denied her request for relief on the basis that she had not made a “reasonable error” when she relied on advice from her…