Weekly Tax Tips
Remember the 21 year deemed disposition rule for trusts
Date: 7 Oct 2011
There are a number of key things to remember when planning with trusts. Not only is it important to ensure a trust is properly formed from the outset, but it is also critical to keep in mind the deemed disposition rules for trusts. Generally speaking, trusts are deemed to dispose of certain properties at fair market value 21 years after the day the trust was created (and every 21 years thereafter), and are deemed to reacquire such properties at that same fair market value amount. The result is that where trust property has appreciated in value, any income and/or gains will be taxed in the trust. Losses can also result if the value of trust property has declined. For more information, read our Tax Factor 2011-03 article “Remember the 21 year deemed disposition rule for trusts”.
This tax tip is a publication of BDO Canada LLP on developments in the area of taxation. This material is general in nature and should not be relied upon to replace the requirement for specific professional advice. The information in this tax tip is current as of 7 Oct 2011.
More Tax Tips
Here!
