Joint Spousal Trust
A joint spousal trust is an inter vivos trust created after 1999 by a spouse who was aged 65 or over at the time, or by both spouses if they were both aged 65 or over at the time.
The spouses have the exclusive right, during their lifetimes, to receive all income from the trust. No other person, prior to the death of the surviving spouse, can receive or otherwise obtain the use of any part of the trust's income or capital.
The rollover rule may apply to transfers of property made to the joint spousal trust by the settlor, in which case there is no immediate tax incidence for the settlor. For more information, see Qualifying Transfer.
However, such a transfer may also be subject to the income attribution rule. In this case, the settlor, not the spouse nor the trust, will have to report the income (or loss) derived from the transferred property or the capital gain (or loss) derived from the subsequent disposition of the property. For more information, see Trust of Which the Beneficiary Is the Spouse or a Minor and Revocable or Blind Trust.
Since 2016, the following rules have applied to joint spousal trusts for the taxation year in which the beneficiary dies:
- The trust's taxation year is deemed to end at the end of the day of death, and a new taxation year is deemed to begin at the start of the following day.
- The trust's income for the year is taxable in the trust's income tax return.
- The deadline for paying the trust's income tax and filing its income tax return and RL-16 slips corresponds to the 90th day of the year following the calendar year during which the trust's taxation year ended.
You must check box 28 of the Trust Income Tax Return (TP-646-V) if the trust is a joint spousal trust and the beneficiary of the trust died in the taxation year concerned. You must also enter the beneficiary's date of death.