A trust may be considered a master trust if it makes an election to that effect (by enclosing a letter with its income tax return for its first taxation year) and if, since its creation:

• it has always been resident in Canada;
• its only undertaking has been the investment of funds;
• it has never borrowed money, unless the loan was for a period of 90 days or less and was not part of a series of loans or other transactions and repayments;
• it has never accepted deposits; and
• its only beneficiaries have been trusts governed by a deferred profit-sharing plan (DPSP), a registered pension plan (RPP), a pooled registered pension plan (PRPP) or a voluntary retirement savings plan (VRSP).

A trust that makes such an election is exempt from income tax and is not required to file a return for subsequent taxation years.