At the 2016 conference for the association de planification fiscale et financière held on October 7, 2016, the CRA answered several questions on graduated rate estates (“GREs”) during a round table session, which it has now made available in writing through commercial databases (CRA documents #2016-0651731 and 2016-0652821). The questions asked at the conference concerning GREs include:
1) For the application of clause (c)(ii)(B) of the definition “total charitable gifts” in subsection 118.1(1), does an estate need to qualify as a GRE in the taxation year in which the gift is made or in the taxation year in which the eligible amount of the gift is deducted in computing the individual’s tax payable?
2) Based on proposed legislation released by the Department of Finance on January 15, 2016, can a former GRE that makes a gift more than 36 months after the death of an individual, but within 60 months after the individual’s death, claim the gift in the first three taxation years of the estate?
Referring to the wording of clause (c)(ii)(B) of the definition of “total charitable gifts” in subsection 118.1(1), CRA stated that the answer to question 1 is “[i]n the taxation year in which the gift is made.” With regard to question 2, CRA answered in the negative, stating a “gift made by an estate that is not a GRE is only available to the estate in the taxation year in which the gift is made or in any of the next five taxation years from the year in which the gift is made (clause 118.1(1)(ii)(A)).”
In a separate document, CRA responded to the question of whether “… clause (c)(ii)(A) of the definition of ‘total charitable gifts’ in subsection 118.1(1)” applies to a GRE? The answer in this regard is yes, because “[a] GRE or a former GRE is a trust.”