CRA indicates that a graduated rate estate can include a testamentary trust

In its oral presentation at the 19 June 2015 STEP Roundtable, CRA indicated that a deceased has only one estate for income tax purposes including under the rules applicable to graduated rate estates, even if there are multiple wills with different executors or worldwide assets. In its published version, CRA now has added a statement that:

The composition of the graduated rate estate for tax purposes will often depend on how the decedent wanted his/her assets to be administered as dictated by will. Where, for example, a will deals immediately with separating property to be held in a distinct testamentary trust apart from other assets of the estate, there can still only be one graduated rate estate allowed for tax purposes for the 36 month period (or earlier if administration is complete) following death.

…Question 8 of the 2012 STEP Roundtable [stated]:

...[T]he estate of the deceased and other trusts funded out of the residue of the estate will generally be testamentary trusts. Traditionally, the CRA has not attributed any tax consequences to the transition from estate administration to trust administration and generally has viewed the trusts created out of the residue as arising on death.

Neal Armstrong. Summary of 19 June 2015 STEP Roundtable, Q. 2, 2015-0572091C6 under s. 248(1) – graduated rate estate.