Budget 2014 - Amateur Athlete Trust
Notice to the reader
This measure has received Royal Assent.
For income that is contributed to an Amateur Athlete Trust after 2013, the budget proposes to allow the income to qualify as earned income for the purposes of determining the registered retirement savings plan (RRSP) contribution limit of the trust's beneficiary. The budget also proposes to apply similar treatment for contributions in 2011, 2012 and 2013 if an election is filed by the beneficiary.
What is an Amateur Athlete Trust?
An amateur athlete who is a member of a Registered Canadian Amateur Athletic Association and is eligible to compete in international sporting events as a Canadian national team member is permitted to place certain income in an arrangement known as an amateur athlete trust (AAT), of which the amateur athlete is the beneficiary.
What kind of income can be contributed to an AAT?
Endorsement income, prize money, or income from public appearances or speeches may be contributed to an AAT, if it is received in connection with the athlete's participation in international sporting events.
What is the current tax treatment of these contributions?
When an amount is contributed to an AAT, it is excluded from the income of the amateur athlete. Furthermore, no tax is payable by the trust, including on investment income earned by the trust. Property in an AAT is included in the beneficiary's income on distribution or, at the latest eight years after the last year in which the individual competed as a Canadian national team member. Property remaining in the trust at the end of the eight-year period is deemed to have been distributed to the beneficiary.
What is the budget proposing with respect to these contributions?
For income that is contributed to an AAT after 2013, the budget proposes to allow the income to qualify as earned income for the purposes of determining the registered retirement savings plan (RRSP) contribution limit of the trust's beneficiary. The budget also proposes to apply similar treatment for contributions in 2011, 2012 and 2013 if an election is filed by the beneficiary.
How does the election for contributions made in 2011, 2012 and 2013 work?
The beneficiary of an AAT will be permitted to make an election to have income that was contributed to trust in 2011, 2012 and 2013 also qualify as earned income. The beneficiary's RRSP limit will be re-determined for each of these years based on the additional earned income created as a result of the election and any additional RRSP room will be added to the individual's RRSP contribution room for 2014. An individual will be required to make the election in writing and submit it to the CRA before March 3, 2015.
How do I make an election?
To make the election, submit a letter including a statement from the trustee identifying the contributions made to the AAT in each of 2011, 2012 and 2013, to the following address:
Pension Workflow Section
Ottawa Technology Centre
875 Heron Road
Ottawa ON K1A 1A2
Where can I get more information about this new treatment for contributions to AAT?
The CRA is committed to providing taxpayers with up-to-date information. The CRA encourages taxpayers to check its Web pages often. All new forms, policies, and guidelines will be posted as they become available.
In the meantime, please consult the Department of Finance Canada's Budget 2014 documents for details.