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: Can successive trusts meet the words "on ans as a consequence of death" in the definiton of trust in subsection 108(1)?
Position: Yes.
Reasons: Creation under the terms of the will is sufficient.
980103
XXXXXXXXXX T. Murphy
(613) 957-8283
Attention: XXXXXXXXXX
September 22, 1998
Dear Sirs:
Re: Definition of Testamentary Trust
We are writing in response to your letter dated January 16, 1998, concerning the definition of testamentary trust in subsection 108(1) of the Income Tax Act (the "Act"). In particular, where the terms of a will provide that on the death of the first generation beneficiary (e.g., surviving spouse), new trusts for the successive interests of the second generation beneficiaries (e.g., children) will be created, the issue is whether the new trusts will be trusts "that arose on and as a consequence of the death of an individual".
One view is that the new trusts will not meet the above-noted phrase as they do not arise on the death of the individual but at a later point in time. The alternate view is that "on death" is not necessarily to be construed as "at the time of the death" and that creation under the terms of the will is sufficient.
As you know, the above issue was the subject of several files under review by the Appeals Division of Revenue Canada. Hence, we were unable to respond to your letter until a comprehensive review of the issue was completed.
That review has now been completed and our position is that the new trusts will be trusts "that arose on and as a consequence of the death of an individual" as set out in the definition of testamentary trust in subsection 108(1) of the Act.
Please contact T. Murphy if you have any questions concerning our response.
R.S Biscaro
Director
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
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