Form T2223, Election, Under Subsection 159(6.1) of the Income Tax Act, by a Trust to Defer Payment of Income Tax

Form T2223, Election, Under Subsection 159(6.1) of the Income Tax Act, by a Trust to Defer Payment of Income Tax

The trust can elect to pay its income tax arising from the deemed dispositions reported on Form T1055 in up to 10 annual instalments. Interest at the prescribed rate will apply. Use Form T2223 to make this election, and send it to your tax services office no later than the day the return is due for the tax year the deemed disposition occurs.

Transfer of trust property to another trust

If one trust (Trust A) transfers capital property, land inventory, or resource property to another trust (Trust B), the deemed disposition day for Trust B becomes the earliest of the following dates:

• Trust A's deemed disposition day that would have occurred if the transfer had not been made

• Trust B's deemed disposition day that would have occurred if the transfer had not been made

• the day of the transfer if the original transfer to Trust A occurred on a rollover basis, for example, where Trust A is one of the following:

  • a spousal or common-law partner trust, and the beneficiary spouse or common-law partner is still alive at the time of the transfer

  • a joint spousal or common-law partner trust, and the settlor or beneficiary spouse or common-law partner is still alive at the time of the transfer

  • an alter ego trust, and the settlor is still alive at the time of the transfer

The last condition will not apply when the transfer is between two trusts of the same type. For example, from one alter ego trust to another alter ego trust.

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