Employee trust

An employee trust is an arrangement that the trustee has elected to qualify as an employee trust, under which an employer remits amounts to the trust for the benefit of employees.

Deadline for election

The trustee must make the election in a trust return filed within 90 days after the end of the trust's first taxation year. The contributions that the employer remits to the trustee may be deducted by the employer only if the election has been exercised.

Taxation of allocated amounts

To maintain its status as an employee trust, the trust must allocate to its beneficiaries, each year, all of its non-business income and the totality of employer contributions for that year.

The amounts allocated are taxable as employment income for the beneficiaries in the year of the allocation, and the trust must report the amounts on RL-1 slips, rather than on RL-16 slips.

The trust must also complete form RLZ-1.S-V, Summary of Source Deductions and Employer Contributions, respecting these amounts. The RL-1 slips and RLZ-1.S-V form must be filed no later than the last day of February of the year following the end of the trust's taxation year.

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