Preferred Beneficiary

An individual resident in Canada who is a beneficiary of a trust at the end of the year and meets one of the two following conditions:

  • The beneficiary qualifies for the tax credit for a severe and prolonged impairment in mental or physical functions for the taxation year that ends in the trust's taxation year.
  • The beneficiary:
    • is 18 years old before the end of the taxation year and was an individual's dependant during the year because of an impairment in mental or physical functions; and
    • has income for the taxation year (not including income from a preferred beneficiary election) that does not exceed the federal dependent tax credit, in accordance with section 108 of the Income Tax Act.

The beneficiary must also be:

  • the settlor of the trust;
  • the spouse or the former spouse of the settlor of the trust; or
  • the child, grandchild or great-grandchild of the settlor or of the settlor's spouse or former spouse.

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