International Trust Structures Structures de Fiducie Internationales

The Canadian Tax Treatment of International Structures

Canada has some of the most comprehensive foreign reporting requirements of any developed nation. Canadian residents are required to report interests in foreign corporations, foreign trusts, foreign property with a cost base exceeding $100,000, and certain foreign pension arrangements. Failure to comply with these reporting obligations carries substantial penalties that can exceed the income or gain that was not reported.

St. Lawrence Gate ensures that all international structures involving Canadian-resident clients are structured with full awareness of Canadian foreign reporting requirements and are administered in a manner that is fully compliant with the T1134, T1135, T3010, and other relevant reporting obligations.

Canadian Residents Inheriting from Foreign Estates

A Canadian resident who inherits assets from a non-resident estate faces a complex intersection of Canadian and foreign tax law. The inheritance itself is not subject to Canadian income tax, but the subsequent income generated by the inherited assets is. Where the foreign estate has assets that carry significant unrealized gains, the Canadian inheritor's cost base may be stepped up under the foreign jurisdiction's tax law while simultaneously creating Canadian taxable income on the same gain under a different set of rules.

Non-Resident Beneficiaries of Canadian Trusts

Where a Canadian family trust has beneficiaries who are non-residents of Canada — children who have emigrated, or grandchildren born and raised outside Canada — the trust distributions to those beneficiaries may be subject to Canadian withholding tax. The rate of withholding depends on the nature of the income and the applicable tax treaty between Canada and the beneficiary's country of residence. St. Lawrence Gate structures trust distributions to non-resident beneficiaries in the most tax-efficient manner available under the applicable treaty.