A testamentary trust was created by Henry Hart at the time of his death on March 1st, 2010 for the benefit of his 3 grandchildren: James, Oliver and Sarah Hart.

Under the terms of the trust, both Oliver and James are to receive $30,000 of the trust income annually, excluding the capital gains. Sarah is to receive fifty percent of the remaining trust income annually, including any capital gains. The terms of the trust also specify that an annual donation to the Red Cross in the amount of $4,000.00 is mandatory. The balance of the income is to accumulate in the trust.

Henry appointed his long-time friend, Joshua Armstrong as the trustee. However, all documents and information concerning the trust income tax return should be mailed to his accountant, Valerie Smithson.

The trust has funds that are held at the ABC Holding Co, USA, totaling $322,780 at the end of the year. The maximum of funds held during the year amounted to $432,650. No income was derived from these funds during the year.

The trust has a net capital loss carried forward from the previous year in the amount of $4,857.00 which is to be used in the current year, if applicable.

Investments:

Investment Expenses:

Rental Statement Information:

T-Slip Information:

Entering Tax Data for the Trust

Trust Identification

• The trust identification section is made up of permanent keywords.
• Permanent keywords will be carried forward from year to year, but can easily be modified if necessary.

It is not necessary to enter all the keywords in a group. Some keywords have been given a default value or can be calculated based on other information entered. For example, Begin-Date will be entered on the tax return as 1 year minus 1 day from the Year-End . So if the Year-End is December 31, 2016, the Begin-Date will be January 1, 2016. However, if a different value is required then enter that value with the keyword Begin-Date .

The Language keyword indicates the language of printing as set in the User's defaults (Alt+F2), regardless of the language of data entry. Therefore you can work in one language but choose the other for printing.

Trustee Information

• Trustee group contains permanent keywords required to enter the information related to the Trustee.
• This would be the data entry for our example:

Beneficiary Information

• The Beneficiary keyword can be entered multiple times. A new beneficiary group should be entered for every beneficiary.
• The keywords in this group are permanent and will be carried forward to future years. However, this information can easily be modified from year to year if required.
• It is important to choose the applicable type of beneficiary as DtMax will take into account the type of beneficiary in the calculation. For example, a beneficiary that is a corporation will not be entitled to the dividend tax credit.
• In order to allocate or designate income to the beneficiary, enter the information through the keyword Allocation . The income or capital gain can be allocated either as a percentage or a fixed amount.
• The sequential number for the RL-16 slip will automatically be assigned based on either the province of residence of the beneficiary or whether there is income from Quebec which must be allocated to the beneficiary.

Income

• The trust's income can be entered with several keywords.
• These keywords are generally not permanent and will not be carried forward to the following year. However, if the Business group is entered, certain information that remains the same from year to year will be carried forward.
• Income that is not capital gains and does not have a T-slip can be entered with the keyword IncomeSource .
• The IncomeSource keyword can be entered repeatedly for all the income applicable to the trust.

• Choose the type of income to be entered and based on this choice, the keywords applicable will be displayed.
  In our example:
  • Standard Life (London)
  • Received foreign dividends: $280.80
  • Taxes withheld: $42.11

T-slip Information

• Information coming from a T3 (RL-16) slip, a T5 (RL-3 slip) or a T5013 (RL-15) can be entered in this group.
• The T3 or T5 slip should be entered with the keyword T-Slip .
• The T5013 slip should be entered with the keyword Partnership .
• Once the main keyword is entered, there are two ways to identify the keyword that applies to the specific box on the slip.
  • The red number immediately to the left of the amount field. ex:
  • The one line description at the bottom of the data entry window.
    Ex.: Cap-Gains.t: capital gains dividends (T5box 18)(RL-3 box I)

The data entry for the T-slips in our example is as follows:

Foreign Income and Property

• Trusts resident in Canada must report all foreign income and all property with a total cost of more than $100,000.
• The trust has funds that are held at the ABC Holding Co, USA, totaling $322,780 at the end of the year. The maximum of funds held during the year amounted to $432,650. No income was derived from these funds during the year.

Capital Gains and Losses

• Capital gains or losses can be entered in several different ways. It can be entered on a t-slip, in the CCA section of a business group or by the keyword CapitalProp .
• In our example, we will be using the keyword CapitalProp . Choose the type of capital applicable. Based on this information DtMax will determine what forms and calculations are required.
• Should another entry be required for capital gains or losses, the keyword CapitalProp will automatically appear below the group just entered. This keyword may be entered an unlimited number of times.

In our example, this keyword will be entered three times, as viewed below.

Investments:

Business Income

• The Business section allows the input of information regarding rental property as well as other types of business income and expenses.
• DtMax will automatically enter the information on the appropriate business schedule based on type of business entered.
• The Business keyword can be repeated as necessary.

In our case, we will choose T776 - Rental.

Carrying Charges and Investment Expenses

• The keyword Total-Inc-Ded is to be used to enter carrying charges, interest expenses, trustee fees and other expenses paid to earn income for the trust.
• These expenses will be deducted from the total income to calculate the net income of the trust.

Investment expenses:

Losses

• Enter all net capital losses and non-capital losses carried forward from previous years with the keyword Loss-CF .
• This keyword only needs to be entered if the trust already has a carry forward of losses and it is the first year of producing the trust return with DtMax.
• Otherwise DtMax will automatically calculate any losses and will carry forward the amount until it is either completely used or expired.

The trust has a net capital loss carried forward from the previous year in the amount of $4,857.00 which is to be used in the current year, if applicable.

Charitable Donations and Gifts

• Use the keyword Donations to specify the type of charitable donation or gift.
• Within this group, use the keyword Amount.d to enter the name of the organization and the amount donated. This amount keyword can be entered multiple times for all the different organizations within the same type of Donation.

The terms of the trust also specify that an annual donation to the Red Cross in the amount of $4000.00 is mandatory.

Viewing the completed tax return

Viewing the tax return can be done at any point as long as there are no errors preventing the calculation. To launch the DtMax calculation simply use one of the following methods:

• Alt-F9
• Tools menu > Recalculate current client
• Click on the Tax return tab