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.
Principal Issues: Does a trust company, in its capacity as trustee of a trust, have to pay, pursuant to subsection 225.1(7), 50% of any tax assessed against the trust before the trust can appeal an assessment of its own tax?
Position: No.
Reasons: Under subsection 104(2), a trust is taxed as an individual, and its liability for tax is separate from the trustee's liability for tax. Since the trustee is not appealing an assessment of tax levied against it, but rather is appealing the tax assessed against the trust, subsection 225.1(7) does not come into play.
May 18, 2011
Phil Jolie, Director Headquarters
International and Trusts Division Lindsay Frank
Income Tax Rulings
Directorate
(613) 948-2227
2011-040581
Appeal by a Trustee of a Trust
This is in response to your email question about the relationship between a large corporate trustee of a trust and the trust itself, where the tax assessed against the trust has been disputed.
Question: Does a trust company, in its capacity as trustee of a trust, have to pay, pursuant to subsection 225.1(7), 50% of any tax assessed against the trust before the trust can appeal an assessment of the trust's tax?
Answer:
The question appears to arise as a result of subsection 225.1(7). In this respect, subsection 225.1(1) provides that collection restrictions apply, with some exceptions, to a tax liability. Subsection 225.1(7) is an exception to this rule, and provides that the Minister can collect from large corporations up to one-half of the amount assessed within 90 days of such an assessment.
At issue is the question whether a large corporation, which is the trustee of a trust, is caught under subsection 225.1(7) in respect of an appeal from tax owing by the trust. In this regard, it should be noted that the trustee of a trust and the trust itself are two separate and distinct entities.
Under subsection 104(2), a trust is taxed as an individual. The subsection distinguishes between the tax liability of the trust and any tax owed by the trustee or legal representative on their own account.
B.J. Skulski
Manager
Insolvency and Administrative Law Section
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