Author Topic: Cross Border Trust Holding  (Read 1107 times)

kenmoremmm

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Cross Border Trust Holding
« on: June 04, 2021, 11:33:44 AM »
I'm a US Citizen and will be moving to Canada later this summer and will become a tax resident of Canada at the time of the move.

How does Canada treat income/distributions that are held within a trust?

I am considering setting up a grantor trust, which I would have to pay taxes on in the US as the grantor of the trust, but I am curious how Canada will treat this "income" since it would not directly be my income; it would be the income of the trust.

Goldielocks

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Re: Cross Border Trust Holding
« Reply #1 on: July 07, 2021, 02:27:58 PM »
I think it is the same for all trusts -- the distributions are treated as "foreign income" when you receive them outside of the trust. 

Canada would not tax a foreign trust for income earned inside that trust. 

Unless it fell into one of the funny trust types where they changed the rules to get rid of a tax loophole like a revocable living trust (inter vivos).. but even there, the solution was to tax the income held in the trust at the top tax rate, and the trust is actually resident outside of Canada, so I can't see how they could touch it.

Argh... maybe ask a CPA who knows about this... but I would bet that they don't tax trusts located outside of Canada, only on the money you receive as a beneficiary from it.

Note, I don't think you are describing and Alter Ego trust, (over 65, set it up without deemed distribution, which means alter ego trusts do not pay gains taxes when set up).  Slightly different rules apply to those in canada from a standard trust.

kenmoremmm

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Re: Cross Border Trust Holding
« Reply #2 on: July 07, 2021, 11:40:25 PM »
Thanks for the feedback. The trust option started getting difficult to sort out despite reaching out to several trust attorneys. Thus, I took care of this holding as noted in the other thread you commented on.