Eligible income from a testamentary trust

A testamentary trust is a trust or estate that is generally created on and as result of the death of the person. The terms of the trust are established by the will or by court order in relation to the deceased individual’s estate under provincial or territorial law.

Where a testamentary trust receives the types of income described below and designates an amount in respect of certain beneficiaries of the trust, the beneficiaries can transfer the designated amount to their own RRSP if certain conditions are met. For purposes of these transfers, eligible income received by a testamentary trust in a year throughout which it was a resident of Canada includes:

• a lump-sum payment from an RPP (other than an amount that relates to an actuarial surplus) paid to the trust as consequence of the death of the settlor of the trust
• a lump-sum payment from a foreign retirement arrangement if the payment would have qualified to be transferred to the beneficiary’s RRSP had it been received by the beneficiary instead of the trust
• a lump-sum payment from a deferred profit sharing plan (DPSP) paid to the trust as a consequence of the death of the settlor of the trust, who was an employee of an employer who participated in the DPSP on behalf of the settlor

Generally, these lump-sum payments are transferred indirectly to the individual’s RRSP.

Forms and publications

• Form T2030, Direct Transfer Under Subparagraph 60(l)(v)
• Form T2033, Direct Transfer Under Subsection 146.3(14.1), 147.5(21) or 146(21), or Paragraph 146(16)(a) or 146.3(2)(e)
• Form T2220, Transfer from an RRSP, RRIF, PRPP, or SPP to Another RRSP, RRIF, PRPP or SPP on Breakdown of Marriage or Common-law Partnership
• Trust types and codes
• Income Tax Folio S2-F1-C2, Retiring Allowances