Deemed Disposition on Distributions from Trusts

davidstreicher · Post by **davidstreicher** » Tue Mar 06, 2012 7:18 pm

In general, under Canadian tax law, assets held in trust are deemed sold every 21 years. Suppose the trust distributes all of its assets in year 20. Is the distribution from the trust to the beneficiaries a deemed disposition under Canadian tax law? Seems like it must be; otherwise, there would be a loophole.

JGCA · Post by **JGCA** » Fri Mar 09, 2012 1:08 am

the 21 year rule deems the disposition to have occured, if one was to volontarily distribute trust assets out in yr 20 then its not a deemed disposition its an actual distribution of trust prperty which will be shown on the T3 and follow normal tax treatment including the fact that one can distribute out tax free capital to beneficiaries as well as income amounts.