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ARTICLE · 04 JUNE 2015

Graduated Rate Estates (New Changes In Bill C-43)

Miller Thomson
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Currently testamentary trusts and grandfathered inter vivos trusts benefit from graduated rates of taxation, but commencing January 1, 2016, these trusts will be subject to the top marginal tax rates.

CanadaFamily and Matrimonial
Victoria Hockley
Victoria Hockley
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Currently testamentary trusts and grandfathered inter vivos trusts benefit from graduated rates of taxation, but commencing January 1, 2016, these trusts will be subject to the top marginal tax rates. In the 2013 Federal Budget, the Federal Government announced that these changes were being introduced as a response to certain perceived abuses, including the use of multiple testamentary trusts and tax motivated delays in completing estate administration.

Draft legislation respecting these changes was released on February 11, 2014, updated on August 29, 2014 and subsequently the legislation received royal assent on December 16, 2014. The result is that all trusts, other than graduated rate estates and qualified disability trusts, will be subject to the highest marginal rates of taxation. This article will address the concept of a graduated rate estate and some of the benefits that GREs will receive.

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