A person may appropriate a part of his or her property for a particular purpose by placing it in a trust (see definitions).
There are two types of trust:
- a testamentary trust, which administers the property of a person after his or her death (see definitions);
- an inter vivos trust, which administers the property of a person during his or her lifetime (see definitions).
Obligation to file a trust income tax return
As a general rule, a trust must file a trust income tax return for a taxation year for which it is obliged to pay income tax if it is considered to be resident in Québec or in Canada outside Québec. A trust is generally considered to be resident in Québec or in Canada outside Québec if the trustee (see definitions) resides in Québec or in Canada outside Québec. A trust that is resident in Québec on the last day of a taxation year must file a trust income tax return for that taxation year.
Even if the amount of income tax is nil, the trust must also file a return if it
- has no income tax payable for the year because it is deducting a loss from a previous year;
- is required to report a capital gain for the year;
- sold property in the year;
- allocated a benefit with a value of more than $100 to a beneficiary for upkeep expenses (see definitions), maintenance expenses or taxes related to property used by the beneficiary;
- received income, gains or profits intended for an individual who resides in Québec or a corporation with an establishment in Québec and
- its total income, as indicated in the trust return, exceeds $500,
- the income to be allocated to a beneficiary exceeds $100;
- is an amateur athlete trust;
- is required to report a death benefit payable under the Québec Pension Plan or the Canada Pension Plan. However, a succession (estate) that has no other income to report is not required to file a trust return if the death benefit is included in the income of a beneficiary of the succession.
Filing RL-16 slips
In all cases, if the trust allocated capital gains or income to a beneficiary, the trust must prepare a trust return and also issue an RL-16 slip in the name of the beneficiary to report the amounts so allocated. However, if the amount allocated to the beneficiary is interest income in a single amount of less than $100, the trust is not required to issue an RL-16 slip.
The beneficiary must nevertheless be informed of the amount allocated, since the beneficiary is required to report all such amounts for income tax purposes, even if no RL-16 slip was issued.
Trust
An entity that results from an act (an onerous or gratuitous contract, or a will) whereby a person transfers property from his or her patrimony to another patrimony that he or she constitutes; the property is appropriated for a particular purpose, and a trustee undertakes to hold and administer it.
Testamentary trust
A trust in which a person’s property is placed after the person’s death for the purpose of administering his or her succession (estate) or providing support payments. A testamentary trust can be established
- by a will;
- by law, where there is no will;
- by a court order.
Inter vivos trust
Any trust other than a testamentary trust. In most cases, it is created by an authentic act drawn up by a notary.
Trustee
An individual or a trust institution that holds legal title to property on behalf of the beneficiaries of a trust.
Upkeep expenses
Expenses incurred by the person who holds title to immovable property for the maintenance and improvement of the property.
Liquidator of a succession
An individual or a financial institution designated (or appointed by a court) to administer or liquidate a succession (estate).
Clientele
The following types of trusts must file a trust return:
- a spousal trust;
- an amateur athlete trust;
- a trust for a beneficiary under 21 years of age;
- a mutual fund trust;
- an insurance segregated fund trust;
- an employee life and health trust;
- a unit trust;
- an alter ego trust;
- a specified investment flow-through trust ( SIFT trust);
- a joint spousal trust;
- a personal trust;
- an employee trust;
- a self-benefit trust;
- a master trust;
- a deemed trust;
- a religious organization;
- a non-profit organization;
- an employee benefit plan.
Conditions
Special conditions apply to the various types of trusts. For all information, contact Revenu Québec.
Note
Certain trusts are exempted from the obligation to file a trust income tax return. For more information, refer to the Guide to Filing the Trust Income Tax Return (TP-646.G-V), published by Revenu Québec.
