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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues:
Is a master trust that has elected pursuant to section 259 of the Act required to file a taxation return?
Position:
Only for the year for which it first elects to be a master trust. Thereafter, if it has made a valid 259 election that applies to an entire taxation year, it will not be subject to Part XI tax, thus it need not file a return.
Reasons:
The law in 206(2.1) is clear as is the administrative policy in the T3 Trust Guide and IC78-14R3.
XXXXXXXXXX 2003-002806
P. Kohnen
July 14, 2003
Dear XXXXXXXXXX:
Re: Technical Interpretation - Master Trust and Part XI Tax
This is in response to your e-mail submission of June 11, 2003 which was forwarded from our Specialty Publications Section, wherein you requested our opinion regarding the tax return filing requirements imposed by the Income Tax Act (the "Act") on certain master trust returns.
Pursuant to paragraph 149(1)(o.4) of the Act, a master trust is a trust that meets the prescribed conditions in section 5001 of the Income Tax Regulations to be a master trust, and encloses its election with its tax return for the first taxation year for which the election is made.
Paragraph 205(a) of the Act describes the taxpayers that are subject to Part XI tax in respect of excess foreign property, including a master trust described in paragraph 149(1)(o.4).
As is noted on page of the 2002 T3 Trust Guide (form T4013), after the first T3 return is filed for a master trust, it need not file further returns unless it becomes liable for Part XI tax in a taxation year, in which case it must file a return for that year, pursuant to subsection 207(1) of the Act. As was noted in your submission, and is reflected in paragraph 16 of Information Circular 78-14R3, either a T3D or T3P return may be filed to meet the requirements of subsection 207(1).
However, pursuant to subsection 206(2.1), a master trust that has elected pursuant to section 259 of the Act will not be subject to Part XI tax during the period for which its election is valid.
Accordingly, a master trust will not have to file a T3D or T3P tax return for a taxation year throughout which a valid election under section 259 of the Act has been made by the trust.
We trust that the above comments will be of assistance to you.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
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