In December 2014, legislation was passed which significantly changed the taxation of certain types of testamentary trusts such as spousal/common law partner trusts, joint partner trusts and alter ego trusts, more commonly referred to as life interest trusts. In our November 25, 2014 Tax Alert, we outlined how the rules could result in a mismatch of tax liability to assets. Essentially, the life interest trust now has a year-end at the end of the day the surviving spouse (i.e. beneficiary spouse) dies. Additionally, the new rules treat the life interest trust's income for the short year as having been paid to the beneficiary spouse in that year.
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| Collins Barrow periodically publishes Tax Alert for its clients and associates. It is designed to highlight and summarize the continually changing tax and business scene across Canada. The effective tax rates highlighted in this alert represent information current to March 14, 2016 and are subject to change based on federal or provincial tax updates. While Tax Alert suggests general planning ideas, we recommend professional advice always be sought before taking specific planning steps. |
