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.