Section 233.2

Subsection 233.2(1) - Definitions

Exempt Trust

Administrative Policy

12 April 2016 External T.I. 2015-0595461E5 - Australian Super Fund & T1135

Australian Superannuation Fund not an exempt trust due to taxability

An Australian Superannuation Fund (or “Super Fund”) is a government-regulated trust that has been registered and approved by the Australian Government and is funded by contributions from employers and individuals over their working lives in order to provide retirement incomes. As the investment earnings within the Super Fund are subject to Australian tax (of 15%, or 10% on capital gains), it does not qualify as an “exempt trust,” so that a Canadian beneficiary’s interest is considered to be specified foreign property, and the individual is required to file T1135s reporting inter alia the “cost amount” of the individual’s interest in the fund.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 233.3 - Subsection 233.3(1) - Specified Foreign Property - Paragraph (n) Australian pension fund subject to 10%-15% tax rate not an exempt fund 309
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Cost Amount - Paragraph (e) cost amount of pension rights includes future amounts to which legal entitlement 184
Tax Topics - Income Tax Act - Section 162 - Subsection 162(7) no penalty for reasonably estimating an unknown amount, e.g., the “cost amount” of a pension interest 172

19 August 2014 External T.I. 2014-0527921E5 - "Exempt Trust" under s. 233.2(1)

Australian IPAC

An Australian "ipac select superwrap personal super plan" ("IPAC") was described as an Australian pension plan and the fund for which employer contributions, but not voluntary contributions, are taxed in the fund. Is an IPAC is considered an "exempt trust" such that it is exempt from being reported on Form T1135? After paraphrasing the exempt trust definition, CRA stated that "where the IPAC is a trust and meets all the conditions of an ‘exempt trust', then it would be exempt from the Form T1135 reporting."

12 August 2010 External T.I. 2010-0360171E5 F - Déclaration T-1135 et biens étrangers

exempt foreign trust definition contains strict conditions

A Canadian resident, who had lived in Switzerland for a number of years before returning, now holds a pension account in Switzerland known as a "Vested Benefits Account" (exceeding $100,000) that is a pension mechanism provided for under Swiss law from which retirement benefits will be paid when the individual has reached the required age and meets the other conditions set out in the Swiss Federal Law on the Occupational Old-Age, Survivors' and Disability Benefit Plans (LOB). Before indicating that this asset was not excluded under s. 233.3(1) – specified foreign property – para. (n) as an interest in an exempt trust and, thus, was subject to the s. 233.3 reporting requirement, CRA noted that the para. (n) exception referenced:

an interest in various classes of trusts, including trusts that provide for certain annuity or pension payments. Several strict conditions must be satisfied in order for such trusts to be considered excluded foreign property.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 233.3 - Subsection 233.3(1) - Specified Foreign Property - Paragraph (n) Swiss vested benefits account was not exempted 113

Paragraph (b)

Administrative Policy

4 June 2020 External T.I. 2018-0753611E5 - Form T1135 and US pension plan

assumption of US pension payments by Pension Benefit Guaranty Corp. did not affect exempt trust status

Given the exception in para. (n) of the definition in s. 233.3(1) of specified foreign property and para. (b) of the exempt trust definition in s. 233.2(1) of exempt trust for a trust that is established in connection with a foreign plan that provides pension, retirement or employee benefits where the trust is exempt from income tax imposed by the country of its residence and is maintained primarily for the benefit of non-resident individuals, is a resident individual required to file Form T1135 respecting the individual’s interest in a US qualified pension plan that was terminated as a result of an asset insufficiency so that the Pension Benefit Guaranty Corporation (“PBGC”), as replacement trustee, pays the plan benefits to the members (the majority of whom reside in the US)? CRA stated:

[T]he PBGC’s involvement in the administration of the plan has no impact on the availability of the exception for foreign pension trusts. Consequently, the individual would not be required to file Form T1135 in respect of their interest in the plan.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 233.3 - Subsection 233.3(1) - Specified Foreign Property - Paragraph (n) Pension Benefit Guaranty Corp.’s taking over a US pension plan does not affect its s. 233.2 exempt trust status 52