Proposed Changes to the Taxation of Testamentary Trusts
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THORSTEINSSONS LLP TAX LAWYERS PROPOSED CHANGES TO THE TAXATION OF TESTAMENTARY TRUSTS
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Presentation to the Estate Planning Council of Abbotsford on October 16, 2013 by David Christian, a Tax Lawyer with Thorsteinssons LLP Vancouver.
Transcript of Proposed Changes to the Taxation of Testamentary Trusts
THORSTEINSSONS LLP
TAX LAWYERS
PROPOSED CHANGES TO THE TAXATION OF TESTAMENTARY TRUSTS
TTHORSTEINSSONS LLP
CHANGES TO TESTAMENTARY TRUSTS: BACKGROUND
June 3, 2013 Consultation Paper released by Department of Finance
Basic thrust – treat estates and testamentary trusts like inter vivos trusts after three years
Submissions requested
Deadline for submissions is December 2, 2013
“A consultation is not a poll. Please do not send multiple or duplicate submissions.”
TTHORSTEINSSONS LLP
CHANGES TO TESTAMENTARY TRUSTS: BACKGROUND
Testamentary and Grandfathered Inter Vivos Trusts
Graduated Rates 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.
TTHORSTEINSSONS LLP
CHANGES TO TESTAMENTARY TRUSTS
What are the changes?
Three Year Period
Disabled Beneficiaries
Certain Trusts for Minors
Spousal Trusts
TTHORSTEINSSONS LLP
RELATED RULES
Installments
Alternative Minimum Tax
Taxation Year
Part XII.2 Tax
Personal Trust Status
Investment Tax Credits
TTHORSTEINSSONS LLP
CHANGES TO TESTAMENTARY TRUSTS: TAX ADMINISTRATION RULES
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.
TTHORSTEINSSONS LLP
THE FUTURE
What happens to existing estates?
What is the process for change in the law?
When is this proposed to occur?
How does planning change?
