CRA considers that Canadian administration of an estate will taint a non-resident inter vivos trust beneficiary under s. 94(3)

CRA has published an interpretation, which is similar to a response at the 2014 STEP Roundtable, that where the only beneficiary of an estate which is administered by a Canadian executor is a non-resident trust with no Canadian beneficiaries or trustees, that trust will be tainted as a s. 94 trust both on the basis that it received a contribution of property from a resident trust (the estate), and under s. 94(2)(n) (deeming the deceased to have been a contributor to it). (The Roundtable response dealt with a non-resident trust established under the will rather than one previously settled by a non-resident settlor, but that made no difference.)

As in the Roundtable response, CRA did not clarify whether the non-resident trust would continue to be tainted under s. 94(2)(n) by the deemed-zombie deceased after the estate was fully administered.

Neal Armstrong. Summary of 26 June 2014 T.I. 2013-0514771E5 under s. 94(2)(n).