New Estate and Trust Tax Regime | KPMG | CA

New Estate and Trust Tax Regime — Welcome Relief Announced

New Estate and Trust Tax Regime

January 20, 2016, No. 2016-03. Finance released draft legislation that provides welcome relief for trusts and estates affected by the "graduated rate estate" rules. The draft legislation, released on January 15, 2016, includes greater flexibility for a deceased’s estate to claim charitable donations and restores the tax treatment of deemed capital gains for a life interest trust back to the tax rules that existed before January 1, 2016. The deadline to provide comments on the draft legislation is February 15, 2016

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Specifically, the draft legislation proposes to:

  • Extend the time allowed for a deceased's estate to make charitable donations.
  • Allow income that is deemed to be recognized upon a life interest beneficiary’s death (e.g., a spouse in a spousal trust) to be taxed in the life interest trust (e.g., a spousal trust) instead of in the life interest beneficiary’s estate. This proposed change has restored the tax treatment of a deemed capital gain back to the tax rules that existed before January 1, 2016 where deemed capital gains recognized upon a life interest beneficiary’s death were taxed in the life interest trust.

Download this edition of the TaxNewsFlash to learn more [PDF 52.4 KB].

Disclaimer

Information is current to January 20, 2016. The information contained in this TaxNewsFlash-Canada is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG’s National Tax Centre at 416.777.8500.

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