Income Tax Act

Marginal note:Tax payable by inter vivos trust

• 122 (1) Notwithstanding section 117, the tax payable under this Part by an inter vivos trust on its amount taxable for a taxation year shall be 29% of its amount taxable for the year.

• Marginal note:Deductions not permitted

  (1.1) No deduction may be made under section 118 in computing the tax payable by a trust for a taxation year.

• Marginal note:Where s. (1) does not apply

  (2) Subsection 122(1) is not applicable for a taxation year of an inter vivos trust other than a mutual fund trust if the trust

  • (a) was established before June 18, 1971;

  • (b) was resident in Canada on June 18, 1971 and without interruption thereafter until the end of the year;

  • (c) did not carry on any active business in the year;

  • (d) has not received any property by way of gift since June 18, 1971;

  • (e) has not, after June 18, 1971, incurred

    • (i) any debt, or

    • (ii) any other obligation to pay an amount,

    to or guaranteed by, any person with whom any beneficiary of the trust was not dealing at arm’s length; and

  • (f) has not received any property after December 17, 1999, where

    • (i) the property was received as a result of a transfer from another trust,

    • (ii) subsection (1) applied to a taxation year of the other trust that began before the property was so received, and

    • (iii) no change in the beneficial ownership of the property resulted from the transfer.