Proposed Changes to the Taxation of Testamentary Trusts
PROPOSED CHANGES TO THE TAXATION OF
CHANGES TO TESTAMENTARY TRUSTS: BACKGROUND
June 3, 2013 Consultation Paper released by Department of
Basic thrust – treat estates and testamentary trusts like inter
vivos trusts after three years
Deadline for submissions is December 2, 2013
“A consultation is not a poll. Please do not send multiple or
CHANGES TO TESTAMENTARY TRUSTS:
Testamentary and Grandfathered Inter Vivos Trusts
Changes in Tax Rates 1972 - 2013
Why does the government want to do this?
The estates of most deceased Canadians are finalized and administered in a timely
fashion and without inappropriate tax planning. However, some taxpayers are
using estates and trusts to obtain unintended tax advantages. Eliminating the
tax benefits of graduated rate taxation for trusts and certain estates would
ensure increased fairness and neutrality in the federal income tax system. The
proposed measures would also address the potential growth in tax planning
involving existing rules and the associated impact on the tax base.
CHANGES TO TESTAMENTARY TRUSTS
What are the changes?
Three Year Period
Certain Trusts for Minors
Alternative Minimum Tax
Part XII.2 Tax
Personal Trust Status
Investment Tax Credits
CHANGES TO TESTAMENTARY TRUSTS: TAX
Rules that extend the period:
during which the Canada Revenue Agency (CRA) may refund an
overpayment of tax,
for objecting to a tax assessment,
for filing an agreement to transfer forgiven amounts under the debt
forgiveness rules, and
during which, at the trust’s request, the CRA may reassess or make
determinations in respect of certain income tax liabilities.
What happens to existing estates?
What is the process for change in the law?
When is this proposed to occur?
How does planning change?