The federal Department of Finance on Friday released for consultation draft legislative proposals that would modify the income tax treatment of certain trusts and their beneficiaries.
For example, the Finance dept. is proposing measures to modify the application of the trust loss restriction event rules to investment funds, which aim to clarify what types of investment funds are excluded from the rules that may limit a trust’s use of losses.
The proposals would also revise the rules for charitable donations by estate trusts designed to increase flexibility by extending the rules to apply to donations made by an estate for up to 60 months after the taxpayer’s death.
In addition, the proposals would revise the rules regarding spousal, common-law partner (and similar) trusts to ensure that income is taxed in the trust and not in the hands of the trust’s beneficiary, when the beneficiary dies.
See: Caution flags for spousal trusts
Comments on the proposals are due by Feb. 15.