An estate cannot transfer property from an RRSP to a former spouse on a rollover basis under 73(1) (which requires that the transferor be an individual other than a trust) or 146(8.1) (if the former spouse is not a beneficiary…
164(6) carry back procedure
An estate that wishes to carry back a loss to the terminal return of the deceased under subsection 164(6) of the Income Tax Act (Canada) must file an amended T1 for the terminal year. A T1ADJ will not suffice. See…
Sale to alter ego trust
A settlor of an alter ego trust can sell property to the trust for a purchase equal to the fair market value of the property, receive cash in satisfaction of that purchase price and still be considered to have transferred…
Joint spousal trust and 75(2) attribution
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,…
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)…
Value of an interest in a discretionary family trust
Cottrell v Cottrell, 2022 BCSC 1607, is a BC family law decision, part of which addresses the value of a spouse’s interest in several discretionary trusts. Joanne was a beneficiary of family trusts established by her parents. Under BC family…