Page 20 - Trusts & International tax class slides

TRUSTS

The taxation of trusts

• The definition of a person in section 1 of the Income Tax Act includes a
trust. This means that a trust is a taxpayer in its own right and that the
process of calculating the taxable income will be exactly the same as for
any other taxpayer.

• A trust can qualify for all the applicable deductions or allowances
provided for in the Income Tax Act.

• Section 1 further defines a trust and a special trust. A trust means any
trust fund, administered and con-trolled by a person appointed under a
deed of trust or will.

• A ‘special trust’ (paragraph (a)) means a trust created solely for a person
with a disability as defined in section 6B(1) of the Act, or a testamentary
trust for relatives where the youngest of the beneficiaries are under the
age of 18 (paragraph (b)).

• Note that if, for example the only disabled person dies or the youngest
of the beneficiaries attain the age of 18, during the year of assessment,

the special trust will be treated as an ordinary trust for the entire year
of assessment.

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