CRA provides information on graduated rate estates and charitable donations

February 13, 2016 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Planned Giving and Canadian Charities

The CRA has provided some information on how estate donations will change in 2016.  Essentially the tax benefits for bequests and certain designations may increase as there is added flexibility as which income can be offset by the estate's charitable donation.  

Here are links to the two CRA documents and the questions they address.  

Estate Donations - Deaths after 2015

For deaths that occur after 2015, new rules will apply for charitable donations made by will and for donations of a direct distribution of proceeds from a Registered Retirement Savings Plan (RRSP), a Registered Retirement Income Fund (RRIF), a Tax-Free Savings Account (TFSA) or a life insurance policy as a result of a beneficiary designation (designation donation). 

1. What are the current rules (for deaths before 2016)?
2. What are the new rules?
3. What are graduated rate estate donations?
4. How will a GRE donation be claimed?
5. What will be the eligible amount of the GRE donation?
6. What is a graduated rate estate?
7. Who can claim a CDTC in respect of an estate donation that is not considered a GRE donation?
8. Under the new rules, will the deemed disposition rule still apply immediately before death to donated capital property?
9. Could these changes result in a gain or loss to the estate when the property is donated to a QD?
10. When do these new rules come into effect?
11. Where can I get more information about this change?

Graduated Rate Taxation of Trusts and Estates and Related Rules

For the 2016 and subsequent taxation years, the top federal marginal tax rate will apply to grandfathered inter vivostrusts and to certain testamentary trusts and estates. Graduated tax rates, as well as the special treatment under a number of related tax rules that are currently available to testamentary trusts, and if applicable to grandfathered inter vivos trusts, will only apply to graduated rate estates. Qualified disability trusts will also compute federal tax using the graduated tax rates.

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1. What are the current tax rates applied to testamentary trusts and grandfathered inter vivos trusts?
2. What is a testamentary trust?
3. What is a grandfathered inter vivos trust?
4. How are the tax rates changing for 2016 and subsequent years?
5. What is a graduated rate estate?
6. What is a qualified disability trust?
7. When is a trust that was previously considered a qualified disability trust subject to the new recovery tax?
8. What is the new recovery tax?
9. What are the changes to the taxation year-end and fiscal period rules?
10. How does the change to the graduated tax rates affect existing grandfathered inter vivos trusts?
11. How does the change to the graduated tax rates affect existing testamentary trusts?
12. What additional special tax rules are currently available to testamentary trusts and to grandfathered inter vivos trusts (for 2015 and earlier years)?
13. What are the changes to these special tax rules?
14. How does the change to these special tax rules affect existing testamentary trusts, and where applicable grandfathered inter vivos trusts?
15. What are the changes to the basic exemption in computing Alternative Minimum Tax?
16. What are the changes to the ability to make Investment Tax Credits available to beneficiaries?
17. What is the change to the tax instalment rules?
18. What are the changes to the exemption for Part XII.2 tax?
19. What are the changes to the classification as a personal trust?
20. What are the changes to the tax administration rules?
21. Where can I get more information about this change?

Do you require legal advice with respect to Canadian or Ontario non-profits or charities?


Charity Lawyer Mark Blumberg

Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.
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