Election to Create a Non-Resident Portion Trust
The non-resident portion of a deemed resident trust corresponds to all property of the trust that is not part of the resident portion of the trust.
If a trust holds a non-resident portion in a taxation year in which the trust is a deemed resident trust, it may make an election, under federal legislation, to have the non-resident portion of the trust deemed to be held by another trust that is an inter vivos trust referred to as a “non-resident portion trust.”
The election takes effect as of the first taxation year in which the deemed resident trust holds a non-resident portion.
As of that time, the following conditions apply to the trusts:
- The non-resident portion trust continues to exist until the deemed resident trust:
- no longer has a resident contributor or a resident beneficiary;
- becomes an exempt foreign trust;
- ceases to exist; or
- becomes resident in Canada.
- The terms that apply to the deemed resident trust also apply to the non-resident portion trust.
- The trustees of the deemed resident trust are the trustees of the non-resident portion trust.
- The non-resident portion trust is deemed to have neither a resident contributor nor a connected contributor.
The first taxation year of a non-resident portion trust corresponds to the taxation year of the deemed resident trust as of which the election applies.