Amateur athlete trust

An amateur athlete trust is created under an arrangement whereby funds are received for the benefit of an amateur athlete.

The funds must be held, controlled and administered by a Canadian amateur athletic association prescribed by the rules of an international sport federation. This condition must be respected in order to preserve the athlete's eligibility to compete in a sporting event sanctioned by the federation.

An amateur athlete trust is deemed to have been created no later than the day on which the association receives the first payment. The association is considered to be the trustee, while the athlete is considered to be the beneficiary.

Taxation

The trust does not pay income tax on its taxable income for any taxation year, but it must file the Trust Income Tax Return (TP-646-V).

The amounts that the trust distributed during the year to (or for the benefit of) the beneficiary must be reported on an RL-16 slip issued in the beneficiary's name, rather than on an RL-1 slip.

Absence from competition in international sporting events

A special rule applies if eight years have elapsed since:

• the year in which the beneficiary last competed in an international sporting event as a member of a Canadian national team, or
• the year in which the trust was created, if that year is later

In this case, the trust is deemed to have distributed to the beneficiary, at the end of the taxation year in which the above-mentioned condition is met, an amount equal to the fair market value of the property it then held.

Where the trust is required under the Income Tax Act to pay income tax for the taxation year, the amount deemed to have been distributed to the beneficiary is equal to 64% of the fair market value of the trust's property at that time.

For further information, refer to the Guide to Filing the Trust Income Tax Return (TP-646.G-V).