What is a Special Trust?
There are two types of special trust defined in the Income Tax Act
A special trust type A is a trust set up solely for the maintenance of a person, or persons, who must be related to each other, and with disabilities that prevent them from earning sufficient income to support themselves. A subset of this type of trust is a curatorship trust, which is administered by a curator, who is usually a legal practitioner appointed by the courts.
A special trust type B is a testamentary trust set up solely for the benefit of surviving relatives of the deceased, provided that the youngest beneficiary is under the age of 18.
Both types of special trust are taxed at the same rates as natural persons, and not at 45%. Note, however, that special trusts do not qualify for natural persons’ rebates, medical tax credits, or interest exemption.