Qualifying Transfer

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There is no tax incidence (rollover rule) for the settlor of a trust who makes a qualifying transfer of property to:

In this case, the proceeds of disposition for the settlor and the acquisition cost for the trust are deemed equal to the adjusted cost base (ACB) of the property or, if it is depreciable property, to the undepreciated capital cost (UCC) attributable to the property.

For the transfer to be deemed a qualifying transfer, both the trust and the settlor must be resident in Canada at the time of the transfer. In the case of a testamentary spousal trust, the settlor must be resident in Canada immediately before death, and the trust must be resident in Canada immediately after the property in question is indefeasibly vested in it.

In the case of a self-benefit trust, the transfer must not result in a change in the beneficial ownership of the property and, immediately after the transfer, no other person or partnership may have an absolute or contingent right as a beneficiary of the trust.

The settlor of the trust (or his or her legal representative in the case of a testamentary spousal trust) may elect not to apply the rollover rule, provided he or she notifies the Canada Revenue Agency (CRA) of the election beforehand.


The rollover rule applies to transfers of capital property only; it does not apply to transfers of property included in the inventory of a business.

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