2016-0641461C6 2016 STEP – Q6 – Trust Instalment Requirements

Principal Issues: Whether the CRA will continue with its practice of not assessing interest and penalties where a trust does not make instalment payments as required under section 156.

Position: Yes

Reasons: Consistent with current administrative practice, the CRA will continue to not assess interest and penalties where a trust does not make sufficient instalment payments. If there is any change to this administrative practice in the future, sufficient information will be made available to trustees and estate administrators to assist in meeting the instalment filing requirements.

Author: King, William
Section: s.156(1); s.156.1(2)

STEP CRA Roundtable – June 10, 2016

Question 6. Trust Instalment Requirements and Interest 

In response to question 9 at the 2014 STEP Canada National Conference, the CRA noted that under its then current administrative practices, penalties and interest would not be assessed where an inter vivos trust failed to make sufficient instalment payments.  The CRA stated that all administrative practices related to the new trust rules announced in Budget 2014 would be reviewed and that any changes to these practices would be introduced in conjunction with these new rules.  Can the CRA provide an update to its administrative practice of not assessing instalment interest and penalties?

CRA Response

Prior to 2016 only inter vivos trusts (other than grandfathered inter vivos trusts) were legislatively required to make instalment payments under section 156.  For the 2016 and subsequent taxation years, all inter vivos trusts and testamentary trusts (other than a graduated rate estate) are required to make instalment payments.  However, consistent with the current administrative practice, the CRA will continue to not assess interest and penalties where a trust does not make sufficient instalment payments.

If there is any change to this administrative practice in the future, sufficient information will be made available to trustees and estate administrators to assist in meeting the instalment filing requirements.

2016-064146
William King

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