Change to the tax payable by an inter vivos trust

In some circumstances non-testamentary trusts  (including mutual fund trusts and specified investment trusts) currently pay  tax at a rate of 20%. This will be increased to 24% in order to correspond to the highest marginal tax rate applicable to an individual. This change will apply to taxation years of a non-testamentary trust ending after March 19^th, 2012.

Changes to the taxation of non-resident trusts

An inter-vivos  trust which did not reside in Canada at any moment during a year and is not exempt from tax will be required to pay income tax at the rate of 5.3% on rental income derived from immovable property located in Québec. This new tax will apply to taxation years ending after March 19^th, 2012.

After March 20^th, 2012, a non-resident inter vivos trust which begins to reside in Canada will be deemed to have disposed of (and to have reacquired) all of its immovable property located in Québec for their fair market values immediately before the trust established residency. As a result, the trust will be subject to Québec tax on the taxable capital gain as well as recaptured depreciation arising from the deemed disposition, unless it is exempt from tax.