With respect to income taxes, the grantor is treated as the owner of the assets during the GRAT term and reports all income earned by the GRAT on his individual income tax return. To avoid having to file its own fiduciary income tax return, the GRAT should not apply for a separate taxpayer identification number.

How is a GRAT taxed?

Grantor retained annuity trusts (GRAT) is an estate planning tactic in which a grantor locks assets in a trust from which they earn annual income. Upon expiry, they receive the assets tax-free.

Are GRATs GST exempt?

CAN GST EXEMPTION BE ALLOCATED TO A GRAT AS OF THE DATE OF FUNDING? We now turn to whether it is possible for a taxpayer to allocate GST exemption to a GRAT as of the date of initial funding. Although it is not certain, it appears that in many cases the answer is yes.