Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues:
Year end of an inter vivos trust on effectively wound up during the year all assets distributed
Position:
Calendar year end
Reasons:
The Act does not support year-end other than calendar year end
XXXXXXXXXX
2012-046810
Dominic Tiu
(416) 973-8002
November 7, 2012
Dear XXXXXXXXXX:
Re: Year End of an Inter Vivos Trust on Wind Up
We are responding to your October 31st, 2012 query as to the tax filing deadline for an inter vivos trust that effectively wound up during the year by distributing its remaining assets including the settlement property, to its sole beneficiary.
Pursuant to paragraph 150(1)(c) of the Income Tax Act (the “Act”), a return of income for a trust or estate must be filed within 90 days from the end of the taxation year. Subsection 204(2) of the Regulations to the Act also provides that a return of a trust or estate shall be filed within 90 days from the end of the taxation year. Paragraph 249(1)(b) defines, for purposes of the Act, a taxation year of an individual, which by virtue of subsection 104(2) includes a trust, as being a calendar year. We note that paragraph 104(23)(a) supports a conclusion that the tax year of a testamentary trust ends on the date of final distribution of its assets, however, the law does not support a similar conclusion in respect of an inter vivos trust.
Based on the foregoing, it is our view that the filing deadline for an inter vivos trust in the year of wind up is 90 days from the end of the calendar year. It should be noted however that an inter vivos trust that is a mutual fund trust may elect pursuant to subsection 132.11(1) to have a December 15 taxation year-end.
Yours truly,
Phil Kohnen
for Director
Trusts Section I
Financial Industries and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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