LANGIND E

DOCNUM 2011-0405811R11

AUTHOR Frank, Lindsay

DESCKEY 35

RATEKEY 2

REFDATE 110518

SUBJECT Appeal by Trustee of a Trust

SECTION s. 104(2), 225.1(1) & (7)

SECTION

SECTION

SECTION

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Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

PRINCIPAL ISSUES:     Does a trust company, in its capacity as trustee of a trust, have to pay, pursuant to subsection 225.1(7), 50% of any tax assessed against the trust before the trust can appeal an assessment of its own tax?

POSITION:        No.

REASONS:       Under subsection 104(2), a trust is taxed as an individual, and its liability for tax is separate from the trustee's liability for tax.  Since the trustee is not appealing an assessment of tax levied against it, but rather is appealing the tax assessed against the trust, subsection 225.1(7) does not come into play.

May 18, 2011

Phil Jolie, Director                                                                     Headquarters

International and Trusts Division                                     Lindsay Frank

                                                                                                            Income Tax Rulings

                                                                                                                        Directorate

                                                                                                            (613) 948-2227

                                                                                                            2011-040581

Appeal by a Trustee of a Trust

This is in response to your email question about the relationship between a large corporate trustee of a trust and the trust itself, where the tax assessed against the trust has been disputed.

Question: Does a trust company, in its capacity as trustee of a trust, have to pay, pursuant to subsection 225.1(7), 50% of any tax assessed against the trust before the trust can appeal an assessment of the trust's tax?

Answer:

The question appears to arise as a result of subsection 225.1(7).  In this respect, subsection 225.1(1) provides that collection restrictions apply, with some exceptions, to a tax liability.  Subsection 225.1(7) is an exception to this rule, and provides that the Minister can collect from large corporations up to one-half of the amount assessed within 90 days of such an assessment.

At issue is the question whether a large corporation, which is the trustee of a trust, is caught under subsection 225.1(7) in respect of an appeal from tax owing by the trust.  In this regard, it should be noted that the trustee of a trust and the trust itself are two separate and distinct entities.

Under subsection 104(2), a trust is taxed as an individual.  The subsection distinguishes between the tax liability of the trust and any tax owed by the trustee or legal representative on their own account.

B.J. Skulski

Manager

Insolvency and Administrative Law Section