All About Estates

QUALIFIED DISABILITY TRUST (“QDT”): HOW TO FILE A JOINT ELECTION?

Recently, the Canada Revenue Agency (“CRA”) issued a “how to file” the joint election for a trust to be a QDT: https://www.cra-arc.gc.ca/E/pbg/tf/t3qdt/README.html

From 2016 forward, this form is to be used if one or more beneficiaries are jointly electing that the trust be designated to be QDT for the year. The form should be filed with the trust return (T3) for the year.

The filing of a joint election designates the trust as a QDT, the main benefit of which it will still be subject to graduated tax rates as opposed to being taxed at the top marginal rate pursuant to the recent changes to the tax rules for testamentary trusts,

Each beneficiary electing must be a named beneficiary of the legal instrument that created the trust, must be eligible for the disability tax credit for the taxation year which includes the trust’s yearend, and cannot elect with another trust to be a QDT in the beneficiary’s tax year. The trustee and each beneficiary electing must sign the election form.

Based on information exchanged with CPA Canada, I understand that, in the event a joint election is missing at the time of the assessment of the trust return, the CRA will contact the filer of the trust return and request the election be filed. The CRA will not process the return without the election. If the election is filed after the trust return is filed but prior to assessment, the CRA has created a process to associate the election with the unassessed return.

The election may be submitted by the beneficiary taxpayer electronically using the CRA e-services such as “My Account” or “Represent a Client” at the CRA website: https://www.cra-arc.gc.ca/esrvc-srvce/tx/psssrvcs/menu-eng.html or by mail.

Happy Reading

About Steven Frye
Baker Tilly WM LLP is a leading, independent audit, tax, and business advisory firm based in Vancouver and Toronto, serving clients across Canada. Drawing on well-trained teams across a variety of disciplines, we ensure the alignment of our professional’s skills and experience with client requirements, resulting in exceptional service and business outcomes.

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