Trust for a beneficiary under 21 years of age

A testamentary or inter vivos trust may hold a portion of its income earned in the year on behalf of a beneficiary under 21 years of age, because that portion did not become payable to the beneficiary in the year. The portion in question is nonetheless deemed to have become payable to the beneficiary in the year if the following conditions are met:

• The trust was resident in Canada throughout the taxation year.
• The beneficiary was under 21 at the end of the taxation year.
• The right to the income was vested in the beneficiary no later than the end of the year. This right is indefeasible (that is, no discretionary power may be exercised with respect to the right). Moreover, the right was not subject to any future condition, other than a condition respecting the beneficiary's survival to the age of 40.

An RL-16 slip must be prepared in the beneficiary's name.

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