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Specified investment flow-through (SIFT) trust income tax calculations

SIFT trusts must provide the applicable information identified in the following charts. Print the PDF version of this page and attach a completed copy to your completed Form T3RET, T3 Trust Income Tax and Information Return. The trust must also answer the following 3 questions:

  • Does the trust qualify as a mutual fund trust?
  • Has the trust issued any new equity to replace debt that existed on October 31, 2006? If so, give details.
  • Has the trust issued new equity in satisfaction of the exercise by another person or partnership of a right in place on October 31, 2006, to exchange an interest in a partnership, or a share of a corporation, for that new equity? If so, give details.

Chart 1 – Taxable trust SIFT distributions

Taxable income (line 56 of the T3 return)
$ Blank space for dollar value
Line A
$ Blank space for dollar value
473 ●
Blank space for rates %
$ Blank space for dollar value
Line B

Taxable SIFT trust distributions (line A or B, whichever is less)

57 ●
$ Blank space for dollar value
Line C

Note

Make sure the non-deductible distributions amount that is deemed to be dividends received by the beneficiaries from a taxable Canadian corporation has been included in the allocation of dividends on T3 Schedule 9, but has not been deducted on line 47 of the T3 return.

Chart 2 – SIFT trust tax calculation

Taxable income (line A, Chart 1)
$ Blank space for dollar value
× 33%
$ Blank space for dollar value
Line A
Taxable SIFT trust distributions
(line C, Chart 1)
$ Blank space for dollar value
Blank space for rates %
$ Blank space for dollar value
Line B
Tax payable by SIFT trust (line A plus line B)
11080 ■
$ Blank space for dollar value
Line C
If the rate used in the calculation of line B was negative, deduct line B from line A.

Provincial or territorial part of SIFT trust's tax payable on taxable SIFT trust distributions

Taxable SIFT trust distributions (line C, Chart 1)
11152 ■
$ Blank space for dollar value
Blank space for rates %
$ Blank space for dollar value
Line D

Chart 3 – Provincial or territorial taxable income

Taxable income (line A, Chart 1)
$ Blank space for dollar value
Line A
Taxable SIFT trust distributions (line C, Chart 1)
$ Blank space for dollar value
Line B
Provincial or territorial taxable income (line A minus line B)
58 ●
$ Blank space for dollar value
Line C

Enter the amount from line C on line 1 of the trust's T3 provincial or territorial tax form.

Chart 4 – Adjusted net income

Net Income (from line 50 of the T3 return)
$ Blank space for dollar value
Line A
Taxable SIFT trust distributions (line C, Chart 1)
$ Blank space for dollar value
Line B
Adjusted net income (line A minus line B)
$ Blank space for dollar value
Line C

Use the amount from line C in the place of net income when applicable for calculating the following amounts:

  • foreign tax credits on Form T3PFT, T3 Provincial or Territorial Foreign Tax Credit
  • capital gains refunds on Form T184, 2017 Capital Gains Refund for a Mutual Fund Trust
  • net income allocations to multiple jurisdictions on Form T3MJ, T3 Provincial and Territorial Taxes for 2017 - Multiple Jurisdictions. When calculating the refundable Quebec abatement on Form T3MJ, use the trust's net income

Chart 5 – Adjusting the gross-up amount of eligible dividends kept or not designated by a SIFT trust

Enter the amount from Line 949, Part A, of T3 Schedule 9

$ Blank space for dollar value
Less: The designated amount of taxable dividends deemed to have been an eligible dividend received by a beneficiary of a SIFT trust. (field 473, Chart 1)
$ Blank space for dollar value

Enter this amount on line 19 of T3 Schedule 8

8241 ●
$ Blank space for dollar value

Chart 6 – Refundable Quebec abatement

Net provincial income (line 50 of the T3 return minus line B of Chart 3)
$ Blank space for dollar value
Line 1
Total net income (line 50 of the T3 return)
÷
$ Blank space for dollar value
Line 2
 
=
$ Blank space for dollar value
Line 3

Enter the amount from line 20 of T3 Schedule 11 or, if the trust is subject to minimum tax, the amount from line 51 of T3 Schedule 12

$ Blank space for dollar value
Line 4

Enter the amount from line 3

×
$ Blank space for dollar value
Line 5

Multiply line 4 by line 5

=
$ Blank space for dollar value
Line 6
Rate for refundable Quebec abatement
× 16.5%
Line 7

Multiply line 6 by line 7

$ Blank space for dollar value
Blank space
Refundable Quebec abatement
=
$ Blank space for dollar value
Line 8

Enter the amount from line 8 on line 87 of the T3 return

Blank space for dollar value

Note

If the trust has income in multiple jurisdictions, calculate any refundable Quebec abatement for the trust on Form T3MJ, T3 Provincial and Territorial Taxes for 2017 – Multiple Jurisdictions.

Chart 7 – Net corporate income tax rate

If the trusts' fiscal period is not based on a calendar year, calculate the net corporate income tax rate as follows:

(number of days in period 1) ÷ (number of days in tax year)

=
$ Blank space for dollar value
×
Blank space for rates %
$ Blank space for dollar value
Line 1

(number of days in period 2) ÷ (number of days in tax year)

=
$ Blank space for dollar value
×
Blank space for rates %
+ $ Blank space for dollar value
Line 2
Net corporate income tax rate (line 1 plus line 2)
=
$ Blank space for dollar value
Line 3

Chart 8 – Provincial or territorial SIFT tax rate

Part A – Determine the SIFT trust's general corporate income tax rate for a province or territory

If based on the SIFT trust's tax year, more than one general corporate income tax rate applies for a province or territory, complete Part A for each province or territory.

(number of days in which the first rate applies) ÷ (number of days in tax year)

=
$ Blank space for dollar value
×
Blank space for rates %
$ Blank space for dollar value
Line 1

(number of days in which the second rate applies) ÷ (number of days in tax year)

=
$ Blank space for dollar value
×
Blank space for rates %
+ $ Blank space for dollar value
Line 2
General corporate income tax rate for the province or territory (line 1 plus line 2)

=

$ Blank space for dollar value
Line 3

See the chart on the provincial/territorial SIFT tax part page for the general corporate income tax rates for each province or territory.

Where the SIFT trust has a permanent establishment(s) in only one province or territory, and does not have a permanent establishment outside Canada, line 3 is the SIFT trust's provincial/territorial SIFT tax rate for the year.

Where the SIFT trust had at least one other permanent establishment outside of the province or the territory (whether inside or outside of Canada), complete Part B.

Part B – SIFT trust with multiple jurisdictions in the tax year

If the trust has permanent establishments in multiple jurisdictions in the tax year, use the following formula to determine the prorated general corporate income tax rate for each province or territory. Repeat the calculation for all provinces or territories in which the trust has a permanent establishment, then enter the total of all amounts on line 5.

(taxable SIFT distributions
attributed to a province or territory) ÷ (total taxable SIFT distributions)

=
$ Blank space for dollar value
×
Blank space for rates %
$ Blank space for dollar value
Line 4
Total (from all provinces or territories)
=
$ Blank space for dollar value
Line 5

If the trust has no permanent establishments outside Canada, line 5 is the provincial or territorial SIFT tax rate for the year. Otherwise, continue below.

(taxable SIFT distributions attributed to provinces or territories) ÷ (total taxable SIFT distributions)

=
$ Blank space for dollar value
×
0.1
$ Blank space for dollar value
Line 6
SIFT trust's provincial or territorial SIFT tax rate (line 5 plus line 6)
=
$ Blank space for dollar value
Line 7
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