Revocable or Blind Trust

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A trust is said to be a revocable or blind trust if the transferred or loaned property (or the property substituted for that property) can revert to the transferor or be transferred to persons designated by the transferor after the creation of the trust, or if the property cannot be disposed of during the lifetime of the transferor without his or her consent.

If the trust is resident in Canada, it is the responsibility of the transferor, during the time the transferor is resident in Canada, to report any income or loss on such property and any capital gain or loss on its subsequent disposition (income attribution rule).

The trustee must therefore check the box on line 18 of the trust's return, enter the requested information on line 18a and complete Part 4 of Schedule C.

Note

The income attribution rule does not apply:

  • to the transfer of a share of the capital stock of a private corporation where the share generates dividends or taxable benefits or where the disposition of such a share results in a capital gain that is deemed to be a taxable dividend, and the dividends, benefits or capital gain deemed to be a dividend are paid or payable in the taxation year to a beneficiary who is a minor (see Exception for Split Income of a Beneficiary Who Is a Minor); 
  • if the trust:
    • is an employee trust
    • is a trust established under:
      • a registered pension plan (RPP)
      • a pooled registered pension plan (PRPP)
      • a voluntary retirement savings plan (VRSP) 
      • a profit-sharing plan
      • a deferred profit-sharing plan (DPSP)
      • a registered education savings plan (RESP)
      • a registered disability savings plan (RDSP)
      • a registered supplementary unemployment benefit plan (RSUBP)
      • a registered retirement savings plan (RRSP)
      • a registered retirement income fund (RRIF)
      • an employee benefit plan
      • a tax-free savings account (TFSA)
    • is an employee life and health trust
    • is an insurance segregated fund trust
    • is a retirement compensation arrangement trust
    • is a trust all or substantially all of whose property is held for the purpose of providing benefits to individuals, for their current or former office or employment
    • is an environmental trust
    • is a private foundation that is a registered charity
    • received property (or substituted property) from an individual who received it for a child, provided the only beneficiaries of the trust are children for whom benefits were received by the individual (such as the child's parent) who transferred the property to the trust.

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