Did you know new tax rules came into effect for certain estates and trusts effective January 1, 2016?
The 2014 federal budget introduced measures to eliminate graduated tax rates on certain trusts. Effective January 1, 2016, many trusts will be taxed at the highest marginal rate of 54%.
There are certain types of trusts that will continue to benefit from the lower graduated tax rates including trusts created as a consequence of death for the first 36 months after the date of death.
For trusts that go beyond 36 months, they will be required to have a deemed year end of December 31, 2015 and will be subject to the highest marginal rate effective January 1, 2016. The filing deadline for such trusts is March 31, 2016.
These changes do not apply to “living” Family Trusts created during one’s lifetime. Any income taxed in a “living trust” will continue to be taxed at the highest marginal rate, which is now 54%.
Please feel free to contact us if you have any questions regarding these changes or if you wish to learn more about tax and succession planning with Family Trusts.