I am a dual citizen living in the US for most of my life, but very likely will be moving to Canada within the next 5 years. I am currently looking at creating a charitable remainder unitrust (CRUT) in the USA shortly, but I want to understand how this trust would be taxed by Canada if I move and become a resident.
The Charitable Remainder Unitrust is irrevocable (non-discretionary or fixed in CRA-terms?). I am 100% funding the trust one time at trust creation, am the sole trustee, and am the sole beneficiary. I would be paid 5% of the trust assets until I die - at which point the charities of my choice will receive the remainder. The trust's income is not taxed at all, but the income I receive is taxed by the IRS in buckets corresponding to dividends, short-term gains, long-term gains, etc.
From what I've uncovered so far, it seems that because the trust is charitable in nature, it would be considered a "exempt foreign trust" to the CRA, but haven't been able to fully understand what it would all mean in the end.
1. How would this trust and trust income I receive be taxed? Would I be able to simply transfer the dividend/gain buckets to the equivalent CRA income tax?
2. What kind of accounting and/or reporting of the trust might be required for the CRA?
3. Does the fact that the trust would be created within 5 years of becoming a resident cause a problem?
4. How painful would this be every year to deal with?
Any assistance or advice is greatly, greatly appreciated.
Canadian Taxation of an American Charitable Trust
Moderator: Mark T Serbinski CA CPA