Please note that the following document, although believed to be
correct at the time of issue, may not represent the current
Position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut
ne pas représenter la position actuelle du ministère.
Principal Issues:
Can multiple returns be filed under 104(23)(d) for one deceased
taxpayer?
Position:
No.
Reasons:
Wording of the paragraph refers to election to file "separate
return" including only income from the trust and also refers to
"that period" which may be interpreted to mean that several
returns are possible; the sole correspondence 1978 on this issue
EC4491 (not on mega text) states that separate elections may be
made for each testamentary trust of which the deceased was a
beneficiary - however this letter does not address the multiple
return issue i.e. while separate elections may be made it does
not directly follow that separate returns may be filed. Given
that the full personal tax credits may be claimed for each return
filed (they are not limited by 118.93) the reasonable position is
that only one return under subsection 104(23)(d) is permissable.
October 2, 1996
Ottawa Tax Services Office Trusts Section
Marie-Josée Martel L. Holloway
Assistant Director (613) 957-2104
Client Services Division
Attention: Bill Luhta
Estates & Trusts Division
4th Floor 962292
Subsection 104(23)(d) of the Act
This is in reply to your memorandum dated June 27, 1996, concerning a letter received from XXXXXXXXXX.
Where a taxpayer is a beneficiary under more than one testamentary trust, it is our view that the election under paragraph 104(23)(d) of the Act may be made separately in respect of benefits under each trust. While elections may be made in respect of each interest in a testamentary trust, this would not preclude the filing of one paragraph 104(23)(d) return for the deceased beneficiary, as all periods, for which elections were made, end on the deceased's date of death. The argument in favour of the possibility of filing more than one testamentary return under paragraph 104(23)(d) is based on the fact that the wording in that provision is in the singular and refers to "a separate return of income" filed "as if that other person's only income for the period were the individual's income from the trust for that period."
However, given that personal credits are not limited by section 118.93, the multiplication of these credits, if more that one
paragraph 104(23)(d) return were available, would give an advantage to those who are beneficiaries under multiple testamentary trusts. Considering that if it were not for the election to file a separate return under paragraph 104(23)(d), income reported in the deceased's final return would be higher by virtue of including the income for the "stub periods" of all trust interests held by the deceased, the intent of the provision would appear to be to permit a single return under paragraph 104(23)(d) on which would be reported income from stub periods which would otherwise, had the deceased not died, been reported in the subsequent year's income. Therefore, in our opinion, only one paragraph 104(23)(d) return may be filed.
T. Murphy
A/Chief
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch