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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Whether a lawyer who was appointed as Trustee for the practice and property of another lawyer is required to file T3 returns?
Position: Yes.
Reasons: The trust earned income and it was not payable in the year to the beneficiary. The requirements to obtain the benefit of administrative relief as described in IT-129R were not met.
September 11, 2001
XXXXXXXXXX J.D. Brooks
Estates & Trusts Trusts Section
XXXXXXXXXX TSO
2001-007213
XXXXXXXXXX
This is in reply to your enquiry of February 28, 2001 concerning XXXXXXXXXX. You noted that XXXXXXXXXX was appointed in XXXXXXXXXX as trustee ("Trustee") of the practice and property of XXXXXXXXXX . Your concern is whether XXXXXXXXXX should have been filing T3 returns.
By virtue of Court Orders issued on XXXXXXXXXX, since XXXXXXXXXX the funds held by XXXXXXXXXX and the proceeds of the XXXXXXXXXX certificate that XXXXXXXXXX, Trustee, converted to cash were the property of XXXXXXXXXX, Trustee. Accordingly, XXXXXXXXXX is obligated by paragraph 150(1)(c) of the Income Tax Act (the "Act") to file T3 returns and report the income earned on the trust property. While XXXXXXXXXX is the beneficiary, the trust is taxable on any income retained each year in the trust. To be deductible by the trust pursuant to subsection 104(6) of the Act, the income earned each year would have to have been payable, within the meaning of subsection 104(24) of the Act, each year to the beneficiary. Clearly, the income of previous years was not "payable" since the Law Society was not in a position to enforce payment each year.
We trust that this information will facilitate you concluding the matter.
T. Murphy
Manager
Trusts Section
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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