Tax memo: October 24, 2012 Notice of Ways and Means Motion: “Final” version of non-resident trust rules

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Memo No. 2012-50

On October 24, 2012, Canada’s Department of Finance (Finance) released a Notice of Ways and Means Motion (NWMM) that included the long-awaited “final” version of the proposed legislation for non-resident trusts (NRTs).

This Tax memo summarizes the main provisions of the proposed NRT legislation, referring to current relevant provisions of the Income Tax Act (Canada) as “old NRT rules” and those in the October 24, 2012 NWMM as “new NRT rules.”

An NRT generally will be deemed to be resident in Canada for a taxation year if, at the end of that taxation year, there is either:

  • a “resident contributor” to the NRT; or
  • a “resident beneficiary” under the NRT.

A resident contributor is a person who:

  • has made a contribution to the NRT at any time;
  • is a resident of Canada at the end of the NRT’s taxation year (excluding an individual who has been resident in Canada for less than 60 months (a “new Canadian”);


  • at the time of applying the test is in existence and a resident of Canada.

Residency at the time of the contribution is not relevant.

A resident beneficiary must be:

  • a beneficiary of the NRT;
  • not a “successor beneficiary”; and
  • a resident of Canada at the end of the NRT’s tax year,

but only if there is a “connected contributor” to the NRT.