Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Marginal note:Tax on initial non-qualified investments not disposed of

• 199. (1) Every trust governed by a deferred profit sharing plan or revoked plan shall pay a tax

  • (a) for 1967, equal to the amount, if any, by which 20% of the initial base of the trust exceeds the proceeds of disposition of its initial non-qualified investments disposed of after December 21, 1966 and before 1968;

  • (b) for 1968, equal to the amount, if any, by which 40% of the initial base of the trust exceeds the total of

    • (i) the proceeds of disposition of its initial non-qualified investments disposed of after December 21, 1966 and before 1969, and

    • (ii) the tax payable by the trust determined under paragraph 199(1)(a);

  • (c) for 1969, equal to the amount, if any, by which 60% of the initial base of the trust exceeds the total of

    • (i) the proceeds of disposition of its initial non-qualified investments disposed of after December 21, 1966 and before 1970, and

    • (ii) the tax payable by the trust determined under paragraphs 199(1)(a) and 199(1)(b); and

  • (d) for 1970, equal to the amount, if any, by which 100% of the initial base of the trust exceeds the total of

    • (i) the proceeds of disposition of its initial non-qualified investments disposed of after December 21, 1966 and before 1971, and

    • (ii) the tax payable by the trust determined under paragraphs 199(1)(a), 199(1)(b) and 199(1)(c).

• Marginal note:Refund

  (2) Where at the end of a year,

  • (a) the total of all taxes paid by a trust under subsection 199(1)

  exceeds

  • (b) the total of

    • (i) all refunds made to the trust under this subsection, and

    • (ii) the amount, if any, by which the initial base of the trust exceeds the proceeds of disposition of its initial non-qualified investments disposed of after December 21, 1966 and before the end of the year,

  the trust is, on application in accordance with section 202, entitled to a refund equal to the amount by which the total described in paragraph 199(2)(a) exceeds the total described in paragraph 199(2)(b).

Marginal note:Distribution deemed disposition

200. For the purposes of this Part, a distribution by a trust of a non-qualified investment to a beneficiary of the trust shall be deemed to be a disposition of that non-qualified investment and the proceeds of disposition of that non-qualified investment shall be deemed to be its fair market value at the time of the distribution.