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104 (1) In this Act, a reference to a trust or estate (in this Subdivision referred to as a “trust”) shall, unless the context otherwise requires, be read to include a reference to the trustee, executor, administrator, liquidator of a succession, heir or other legal representative having ownership or control of the trust property, but, except for the purposes of this subsection, subsection (1.1), section 150, subparagraph (b)(v) of the definition disposition in subsection 248(1) and paragraph (k) of that definition, a trust is deemed not to include an arrangement under which the trust can reasonably be considered to act as agent for all the beneficiaries under the trust with respect to all dealings with all of the trust’s property unless the trust is described in any of paragraphs (a) to (e.1) of the definition trust in subsection 108(1).

Marginal note:Restricted meaning of beneficiary

(1.1) Notwithstanding subsection 248(25), for the purposes of subsection (1), paragraph (4)(a.4), subparagraph 73(1.02)(b)(ii) and paragraph 107.4(1)(e), a person or partnership is deemed not to be a beneficiary under a trust at a particular time if the person or partnership is beneficially interested in the trust at the particular time solely because of

• (a) a right that may arise as a consequence of the terms of the will or other testamentary instrument of an individual who, at the particular time, is a beneficiary under the trust;

• (b) a right that may arise as a consequence of the law governing the intestacy of an individual who, at that time, is a beneficiary under the trust;

• (c) a right as a shareholder under the terms of the shares of the capital stock of a corporation that, at the particular time, is a beneficiary under the trust;

• (d) a right as a member of a partnership under the terms of the partnership agreement, where, at the particular time, the partnership is a beneficiary under the trust; or

Marginal note:Taxed as individual

(2) A trust shall, for the purposes of this Act, and without affecting the liability of the trustee or legal representative for that person’s own income tax, be deemed to be in respect of the trust property an individual, but where there is more than one trust and

• (a) substantially all of the property of the various trusts has been received from one person, and

• (b) the various trusts are conditioned so that the income thereof accrues or will ultimately accrue to the same beneficiary, or group or class of beneficiaries,

such of the trustees as the Minister may designate shall, for the purposes of this Act, be deemed to be in respect of all the trusts an individual whose property is the property of all the trusts and whose income is the income of all the trusts.

Marginal note:Deemed disposition by trust

(4) Every trust is, at the end of each of the following days, deemed to have disposed of each property of the trust (other than exempt property) that was capital property (other than depreciable property) or land included in the inventory of a business of the trust for proceeds equal to its fair market value (determined with reference to subsection 70(5.3)) at the end of that day and to have reacquired the property immediately after that day for an amount equal to that fair market value, and for the purposes of this Act those days are

• (a) where the trust

  • (i) is a trust that was created by the will of a taxpayer who died after 1971 and that, at the time it was created, was a trust,

  • (i.1) is a trust that was created by the will of a taxpayer who died after 1971 to which property was transferred in circumstances to which paragraph 70(5.2)(c) (or, in the case of a transfer that occurred in a taxation year before 2007, (b) or (d), as those paragraphs read in their application to that taxation year) or (6)(d) applied, and that, immediately after any such property vested indefeasibly in the trust as a consequence of the death of the taxpayer, was a trust,

  • (ii) is a trust that was created after June 17, 1971 by a taxpayer during the taxpayer’s lifetime that, at any time after 1971, was a trust, or

  • (ii.1) is a trust (other than a trust the terms of which are described in clause (iv)(A) that elects in its return of income under this Part for its first taxation year that this subparagraph not apply) that was created after 1999 by a taxpayer during the taxpayer’s lifetime and that, at any time after 1999, was a trust

  [...]

  • (iii) the taxpayer’s spouse or common-law partner was entitled to receive all of the income of the trust that arose before the spouse’s or common-law partner’s death and no person except the spouse or common-law partner could, before the spouse’s or common-law partner’s death, receive or otherwise obtain the use of any of the income or capital of the trust, or

  • (iv) in the case of a trust described in subparagraph (ii.1) created by a taxpayer who had attained 65 years of age at the time the trust was created,

    • (A) the taxpayer was entitled to receive all of the income of the trust that arose before the taxpayer’s death and no person except the taxpayer could, before the taxpayer’s death, receive or otherwise obtain the use of any of the income or capital of the trust,

    • (B) the taxpayer or the taxpayer’s spouse was, in combination with the spouse or the taxpayer, as the case may be, entitled to receive all of the income of the trust that arose before the later of the death of the taxpayer and the death of the spouse and no other person could, before the later of those deaths, receive or otherwise obtain the use of any of the income or capital of the trust, or

    • (C) the taxpayer or the taxpayer’s common-law partner was, in combination with the common-law partner or the taxpayer, as the case may be, entitled to receive all of the income of the trust that arose before the later of the death of the taxpayer and the death of the common-law partner and no other person could, before the later of those deaths, receive or otherwise obtain the use of any of the income or capital of the trust,

  [...]

• (a.1) where the trust is a pre-1972 spousal trust on January 1, 1993 and the spouse or common-law partner referred to in the definition pre-1972 spousal trust in subsection 108(1) in respect of the trust was

  • (i) in the case of a trust created by the will of a taxpayer, alive on January 1, 1976, and

  • (ii) in the case of a trust created by a taxpayer during the taxpayer’s lifetime, alive on May 26, 1976,

  [...]

• (a.2) where the trust makes a distribution to a beneficiary in respect of the beneficiary’s capital interest in the trust, it is reasonable to conclude that the distribution was financed by a liability of the trust and one of the purposes of incurring the liability was to avoid taxes otherwise payable under this Part as a consequence of the death of any individual, the day on which the distribution is made (determined as if a day ends for the trust immediately after the time at which each distribution is made by the trust to a beneficiary in respect of the beneficiary’s capital interest in the trust);

• (a.3) where property (other than property described in any of subparagraphs 128.1(4)(b)(i) to (iii)) has been transferred by a taxpayer after December 17, 1999 to the trust in circumstances to which subsection 73(1) applied, it is reasonable to conclude that the property was so transferred in anticipation that the taxpayer would subsequently cease to reside in Canada and the taxpayer subsequently ceases to reside in Canada, the first day after that transfer during which the taxpayer ceases to reside in Canada (determined as if a day ends for the trust immediately after each time at which the taxpayer ceases to be resident in Canada);

• (a.4) where the trust is a trust to which property was transferred by a taxpayer who is an individual (other than a trust) in circumstances in which section 73 or subsection 107.4(3) applied, the transfer did not result in a change in beneficial ownership of that property and no person (other than the taxpayer) or partnership has any absolute or contingent right as a beneficiary under the trust (determined with reference to subsection (1.1)), the day on which the death of the taxpayer occurs;

• (b) the day that is 21 years after the latest of

  • [...]

  • (ii) the day on which the trust was created, and

• (c) the day that is 21 years after any day (other than a day determined under any of paragraphs (a) to (a.4)) that is, because of this subsection, a day on which the trust is deemed to have disposed of each such property.

Marginal note:Depreciable property

(5) Every trust is, at the end of each day determined under subsection (4) in respect of the trust, deemed to have disposed of each property of the trust (other than exempt property) that was a depreciable property of a prescribed class of the trust for proceeds equal to its fair market value at the end of that day and to have reacquired the property immediately after that day at a capital cost (in this subsection referred to as the “deemed capital cost”) equal to that fair market value, except that

• (a) where the amount that was the capital cost to the trust of the property immediately before the end of the day (in this paragraph referred to as the “actual capital cost”) exceeds the deemed capital cost to the trust of the property, for the purpose of sections 13 and 20 and any regulations made for the purpose of paragraph 20(1)(a) as they apply in respect of the property at any subsequent time,

  • (i) the capital cost to the trust of the property on its reacquisition shall be deemed to be the amount that was the actual capital cost to the trust of the property, and

  • (ii) the excess shall be deemed to have been allowed under paragraph 20(1)(a) to the trust in respect of the property in computing its income for taxation years that ended before the trust reacquired the property;

• (b) for the purposes of this subsection, the reference to “at the end of a taxation year” in subsection 13(1) shall be read as a reference to “at the particular time a trust is deemed by subsection 104(5) to have disposed of depreciable property of a prescribed class”; and

• (c) for the purpose of computing the excess, if any, referred to in subsection 13(1) at the end of the taxation year of a trust that included a day on which the trust is deemed by this subsection to have disposed of a depreciable property of a prescribed class, any amount that, on that day, was included in the trust’s income for the year under subsection 13(1) as it reads because of paragraph 104(5)(b), shall be deemed to be an amount included under section 13 in the trust’s income for a preceding taxation year.

Marginal note:NISA Fund No. 2

(5.1) Every trust that holds an interest in a NISA Fund No. 2 that was transferred to it in circumstances to which paragraph 70(6.1)(b) applied is deemed, at the end of the day on which the spouse or common-law partner referred to in that paragraph dies, to have been paid an amount out of the fund equal to the balance at the end of that day in the fund so transferred.

Marginal note:Resource property

(5.2) Where at the end of a day determined under subsection (4) in respect of a trust, the trust owns a Canadian resource property (other than an exempt property) or a foreign resource property (other than an exempt property),

• (a) for the purposes of determining the amounts under subsection 59(1), paragraphs 59(3.2)(c) and (c.1), subsections 66(4) and 66.2(1), the definition cumulative Canadian development expense in subsection 66.2(5), the definition cumulative foreign resource expense in subsection 66.21(1), subsection 66.4(1) and the definition cumulative Canadian oil and gas property expense in subsection 66.4(5), the trust is deemed

  [...]

• (b) for the particular taxation year of the trust that included that day, the trust shall

  [...]

[...]

Marginal note:Trust transfers

(5.8) Where capital property, land included in inventory, Canadian resource property or foreign resource property is transferred at a particular time by a trust (in this subsection referred to as the “transferor trust”) to another trust (in this subsection referred to as the “transferee trust”) in circumstances in which subsection 107(2) or 107.4(3) or paragraph (f) of the definition disposition in subsection 248(1) applies,

• (a) for the purposes of applying subsections 104(4) to 104(5.2) after the particular time,

  • (i) subject to paragraphs (b) to (b.3), the first day (in this subsection referred to as the “disposition day”) that ends at or after the particular time that would, if this section were read without reference to paragraphs (4)(a.2) and (a.3), be determined in respect of the transferee trust is deemed to be the earliest of

    • (A) the first day ending at or after the particular time that would be determined under subsection 104(4) in respect of the transferor trust without regard to the transfer and any transaction or event occurring after the particular time,

    • (B) the first day ending at or after the particular time that would otherwise be determined under subsection 104(4) in respect of the transferee trust without regard to any transaction or event occurring after the particular time,

    • (C) the first day that ends at or after the particular time, where

      • (I) the transferor trust is a joint spousal or common-law partner trust, a post-1971 spousal or common-law partner trust or a trust described in the definition pre-1972 spousal trust in subsection 108(1), and

    • (C.1) the first day that ends at or after the particular time, where

      • (I) the transferor trust is an alter ego trust, a trust to which paragraph (4)(a.4) applies or a joint spousal or common-law partner trust, and

    • (D) where

      • (I) the disposition day would, but for the application of this subsection to the transfer, be determined under paragraph 104(5.3)(a) in respect of the transferee trust, and

      • (II) the particular time is after the day that would, but for subsection 104(5.3), be determined under paragraph 104(4)(b) in respect of the transferee trust,

      [...]

  • (ii) where the disposition day determined in respect of the transferee trust under subparagraph 104(5.8)(a)(i) is earlier than the day referred to in clause 104(5.8)(a)(i)(B) in respect of the transferee trust, subsections 104(4) to 104(5.2) do not apply to the transferee trust on the day referred to in clause 104(5.8)(a)(i)(B) in respect of the transferee trust;

• (b) paragraph (a) does not apply in respect of the transfer where

  • (i) the transferor trust is a post-1971 spousal or common-law partner trust or a trust described in the definition pre-1972 spousal trust in subsection 108(1),

  • [...]

  • (iii) the transferee trust is a post-1971 spousal or common-law partner trust or a trust described in the definition pre-1972 spousal trust in subsection 108(1);

• (b.1) paragraph (a) does not apply in respect of the transfer where

  • (i) the transferor trust is an alter ego trust,

  • [...]

  • (iii) the transferee trust is an alter ego trust;

• (b.2) paragraph (a) does not apply in respect of the transfer where

  • (i) the transferor trust is a joint spousal or common-law partner trust,

  • [...]

  • (iii) the transferee trust is a joint spousal or common-law partner trust;

• (b.3) paragraph (a) does not apply in respect of the transfer where

  • (i) the transferor trust is a trust to which paragraph (4)(a.4) applies,

  • [...]

  • (iii) the transferee trust is a trust to which paragraph (4)(a.4) applies; and

• (c) for the purposes of subsection 104(5.3), unless a day ending before the particular time has been determined under paragraph 104(4)(a.1) or 104(4)(b) or would, but for subsection 104(5.3), have been so determined, a day determined under subparagraph 104(5.8)(a)(i) shall be deemed to be a day determined under paragraph 104(4)(a.1) or 104(4)(b), as the case may be, in respect of the transferee trust.

Marginal note:Deduction in computing income of trust

(6) Subject to subsections (7) to (7.1), for the purposes of this Part, there may be deducted in computing the income of a trust for a taxation year

• (a) in the case of an employee trust, the amount by which the amount that would, but for this subsection, be its income for the year exceeds the amount, if any, by which

  [...]

• (a.1) in the case of a trust governed by an employee benefit plan, such part of the amount that would, but for this subsection, be its income for the year as was paid in the year to a beneficiary;

• (a.2) where the taxable income of the trust for the year is subject to tax under this Part because of paragraph 146(4)(c) or subsection 146.3(3.1), the part of the amount that, but for this subsection, would be the income of the trust for the year that was paid in the year to a beneficiary;

• (a.3) in the case of a trust deemed by subsection 143(1) to exist in respect of a congregation that is a constituent part of a religious organization, such part of its income for the year as became payable in the year to a beneficiary;

• (a.4) in the case of an employee life and health trust, an amount that became payable by the trust in the year as a designated employee benefit (as defined in subsection 144.1(1)); and

• (b) in any other case, the amount that the trust claims not exceeding the amount, if any, determined by the formula

  A – B

  where

  B 

  is

  • (i) if the trust is a trust for which a day is to be determined under paragraph (4)(a) or (a.4) by reference to a death or later death, as the case may be, that has not occurred before the beginning of the year, the total of

    • [...]

    • (B) the total of all amounts each of which

      • (I) is included in its income (determined without reference to this subsection and subsection (12)) for the year — if the year is the year in which that death or later death, as the case may be, occurs and paragraph (13.4)(b) does not apply in respect of the trust for the year — because of the application of subsection (4), (5), (5.1) or (5.2) or 12(10.2), and

  • (ii) if the trust is a SIFT trust for the year, the amount, if any, by which

    • (A) the amount determined for A for the trust for the year

    [...]

    • (B) the amount, if any, by which the amount determined for A for the trust for the year exceeds its non-portfolio earnings for the year.

Marginal note:Non-resident beneficiary

(7) No deduction may be made under subsection 104(6) in computing the income for a taxation year of a trust in respect of such part of an amount that would otherwise be its income for the year as became payable in the year to a beneficiary who was, at any time in the year, a designated beneficiary of the trust (as that expression applies for the purposes of section 210.3) unless, throughout the year, the trust was resident in Canada.

Marginal note:Trusts deemed to be resident in Canada

(7.01) If a trust is deemed by subsection 94(3) to be resident in Canada for a taxation year for the purpose of computing the trust’s income for the year, the maximum amount deductible under subsection (6) in computing its income for the year is the amount, if any, by which

[...]

• (b) the total of

  • (i) the portion of the trust’s designated income for the year (within the meaning assigned by section 210) that became payable in the year to a non-resident beneficiary under the trust in respect of an interest of the non-resident as a beneficiary under the trust, and

  • (ii) all amounts each of which is determined by the formula

    A × B

    where

    A 

    is an amount (other than an amount described in subparagraph (i)) that

    • (A) is paid or credited (having the meaning assigned by Part XIII) in the year to the trust,

    • (B) would, if this Act were read without reference to subparagraph 94(3)(a)(viii), paragraph 212(2)(b) and sections 216 and 217, be an amount as a consequence of the payment or crediting of which the trust would have been liable to tax under Part XIII, and

    • (C) becomes payable in the year by the trust to a non-resident beneficiary under the trust in respect of an interest of the non-resident as a beneficiary under the trust, and

    B 

    is

    • (A) 0.35, if the trust can establish to the satisfaction of the Minister that the non-resident beneficiary to whom the amount described in the description of A is payable is resident in a country with which Canada has a tax treaty under which the income tax that Canada may impose on the beneficiary in respect of the amount is limited, and

[...]

Marginal note:Capital interest greater than income interest

(7.1) Where it is reasonable to consider that one of the main purposes for the existence of any term, condition, right or other attribute of an interest in a trust (other than a personal trust) is to give a beneficiary a percentage interest in the property of the trust that is greater than the beneficiary’s percentage interest in the income of the trust, no amount may be deducted under paragraph 104(6)(b) in computing the income of the trust.

(7.2) Notwithstanding any other provision of this Act, where

• (a) a taxpayer has acquired a right to or to acquire an interest in a trust, or a right to or to acquire a property of a trust, and

• (b) it is reasonable to consider that one of the main purposes of the acquisition was to avoid the application of subsection 104(7.1) in respect of the trust,

[...]

[...]

Marginal note:Deduction of amounts included in preferred beneficiaries’ incomes

(12) There may be deducted in computing the income of a trust for a taxation year the lesser of

• (a) the total of all amounts designated under subsection 104(14) by the trust in respect of the year, and

• (b) the accumulating income of the trust for the year.

Marginal note:Income of beneficiary

(13) There shall be included in computing the income for a particular taxation year of a beneficiary under a trust such of the following amounts as are applicable:

• (a) in the case of a trust (other than a trust referred to in paragraph (a) of the definition trust in subsection 108(1)), such part of the amount that, but for subsections (6) and (12), would be the trust’s income for the trust’s taxation year that ended in the particular year as became payable in the trust’s year to the beneficiary; and

• (b) in the case of a trust governed by an employee benefit plan to which the beneficiary has contributed as an employer, such part of the amount that, but for subsections (6) and (12), would be the trust’s income for the trust’s taxation year that ended in the particular year as was paid in the trust’s year to the beneficiary.

Marginal note:Amounts deemed not paid

(13.1) Where a trust, in its return of income under this Part for a taxation year throughout which it was resident in Canada and not exempt from tax under Part I by reason of subsection 149(1), designates an amount in respect of a beneficiary under the trust, not exceeding the amount determined by the formula

the amount so designated shall be deemed, for the purposes of subsections 104(13) and 105(2), not to have been paid or to have become payable in the year to or for the benefit of the beneficiary or out of income of the trust.

Marginal note:Idem

(13.2) Where a trust, in its return of income under this Part for a taxation year throughout which it was resident in Canada and not exempt from tax under Part I by reason of subsection 149(1), designates an amount in respect of a beneficiary under the trust, not exceeding the amount determined by the formula

[...]

• (a) for the purposes of subsections (13) and 105(2) (except in the application of subsection (13) for the purposes of subsection (21)), be deemed not to have been paid or to have become payable in the year to or for the benefit of the beneficiary or out of income of the trust; and

Marginal note:Invalid designation

(13.3) Any designation made under subsection (13.1) or (13.2) by a trust in its return of income under this Part for a taxation year is invalid if the trust’s taxable income for the year, determined without reference to this subsection, is greater than nil.

Marginal note:Death of beneficiary — spousal and similar trusts

(13.4) If an individual’s death occurs on a day in a particular taxation year of a trust and the death is the death or later death, as the case may be, referred to in paragraph (4)(a), (a.1) or (a.4) in respect of the trust,

• (a) the particular year is deemed to end at the end of that day, a new taxation year of the trust is deemed to begin immediately after that day and, for the purpose of determining the trust’s fiscal period after the new taxation year began, the trust is deemed not to have established a fiscal period before the new taxation year began;

• (b) subject to paragraph (b.1), the trust’s income (determined without reference to subsections (6) and (12)) for the particular year is, notwithstanding subsection (24), deemed

  [...]

• (b.1) paragraph (b) does not apply in respect of the trust for the particular year, unless

  • [...]

  • (ii) the trust is, immediately before the death, a testamentary trust that

    • (A) is a post-1971 spousal or common-law partner trust, and

  • (iii) an election — made jointly between the trust and the legal representative administering the individual’s graduated rate estate in prescribed form — that paragraph (b) applies is filed with

    • [...]

    • (B) the trust’s return of income under this Part for the particular year; and

Marginal note:Election by trust and preferred beneficiary

(14) Where a trust and a preferred beneficiary under the trust for a particular taxation year of the trust jointly so elect in respect of the particular year in prescribed manner, such part of the accumulating income of the trust for the particular year as is designated in the election, not exceeding the allocable amount for the preferred beneficiary in respect of the trust for the particular year, shall be included in computing the income of the preferred beneficiary for the beneficiary’s taxation year in which the particular year ended and shall not be included in computing the income of any beneficiary of the trust for a subsequent taxation year.

[...]

Marginal note:Allocable amount for preferred beneficiary

(15) For the purpose of subsection 104(14), the allocable amount for a preferred beneficiary under a trust in respect of the trust for a taxation year is

• (a) where the trust is an alter ego trust, a joint spousal or common-law partner trust, a post-1971 spousal or common-law partner trust or a trust described in the definition pre-1972 spousal trust in subsection 108(1) at the end of the year and a beneficiary, referred to in paragraph (4)(a) or in that definition, is alive at the end of the year, an amount equal to

  • (i) if the preferred beneficiary is a beneficiary so referred to, the trust’s accumulating income for the year, and

• (b) where paragraph (a) does not apply and the preferred beneficiary’s interest in the trust is not solely contingent on the death of another beneficiary who has a capital interest in the trust and who does not have an income interest in the trust, the trust’s accumulating income for the year; and

Marginal note:SIFT deemed dividend

(16) If an amount (in this subsection and section 122 referred to as the trust’s “non-deductible distributions amount” for the taxation year) is determined under subparagraph (ii) of the description of B in paragraph (6)(b) in respect of a SIFT trust for a taxation year

• (a) each beneficiary under the SIFT trust to whom at any time in the taxation year an amount became payable by the trust is deemed to have received at that time a taxable dividend that was paid at that time by a taxable Canadian corporation;

• (b) the amount of a dividend described in paragraph (a) as having been received by a beneficiary at any time in a taxation year is equal to the amount determined by the formula

  A/B × C

  where

  A 

  is the amount that became payable at that time by the SIFT trust to the beneficiary,

  B 

  is the total of all amounts, each of which became payable in the taxation year by the SIFT trust to a beneficiary under the SIFT trust, and

  C 

  is the SIFT trust’s non-deductible distributions amount for the taxation year;

• (c) the amount of a dividend described in paragraph (a) in respect of a beneficiary under the SIFT trust is deemed for the purpose of subsection (13) not to be an amount payable to the beneficiary; and

• (d) for the purposes of applying Part XIII in respect of each dividend described in paragraph (a), the SIFT trust is deemed to be a corporation resident in Canada that paid the dividend.

Marginal note:Trust for minor

(18) Where any part of the amount that, but for subsections 104(6) and 104(12), would be the income of a trust for a taxation year throughout which it was resident in Canada

• [...]

• (b) was held in trust for an individual who did not attain 21 years of age before the end of the year,

[...]

Marginal note:Designation in respect of taxable dividends

(19) A portion of a taxable dividend received by a trust, in a particular taxation year of the trust, on a share of the capital stock of a taxable Canadian corporation is, for the purposes of this Act other than Part XIII, deemed to be a taxable dividend on the share received by a taxpayer, in the taxpayer’s taxation year in which the particular taxation year ends, and is, for the purposes of paragraphs 82(1)(b) and 107(1)(c) and (d) and section 112, deemed not to have been received by the trust, if

• (a) an amount equal to that portion

  • (i) is designated by the trust, in respect of the taxpayer, in the trust’s return of income under this Part for the particular taxation year, and

  • (ii) may reasonably be considered (having regard to all the circumstances including the terms and conditions of the trust) to be part of the amount that, because of paragraph (13)(a), subsection (14) or section 105, was included in computing the income for that taxation year of the taxpayer;

• (b) the taxpayer is in the particular taxation year a beneficiary under the trust;

• (c) the trust is, throughout the particular taxation year, resident in Canada; and

• (d) the total of all amounts each of which is an amount designated, under this subsection, by the trust in respect of a beneficiary under the trust in the trust’s return of income under this Part for the particular taxation year is not greater than the total of all amounts each of which is the amount of a taxable dividend, received by the trust in the particular taxation year, on a share of the capital stock of a taxable Canadian corporation.

Marginal note:Designation in respect of non-taxable dividends

(20) The portion of the total of all amounts, each of which is the amount of a dividend (other than a taxable dividend) paid on a share of the capital stock of a corporation resident in Canada to a trust during a taxation year of the trust throughout which the trust was resident in Canada, that can reasonably be considered (having regard to all the circumstances including the terms and conditions of the trust arrangement) to be part of an amount that became payable in the year to a particular beneficiary under the trust shall be designated by the trust in respect of the particular beneficiary in the return of the trust’s income for the year for the purposes of subclause 53(2)(h)(i.1)(B)(II), paragraphs 107(1)(c) and 107(1)(d) and subsections 112(3.1), 112(3.2), 112(3.31) and 112(4.2).

Marginal note:Designation in respect of taxable capital gains

(21) For the purposes of sections 3 and 111, except as they apply for the purposes of section 110.6, and subject to paragraph 132(5.1)(b), an amount in respect of a trust’s net taxable capital gains for a particular taxation year of the trust is deemed to be a taxable capital gain, for the taxation year of a taxpayer in which the particular taxation year ends, from the disposition by the taxpayer of capital property if

• (a) the amount

  • (i) is designated by the trust, in respect of the taxpayer, in the trust’s return of income under this Part for the particular taxation year, and

  • (ii) may reasonably be considered (having regard to all the circumstances including the terms and conditions of the trust) to be part of the amount that, because of paragraph (13)(a), subsection (14) or section 105, was included in computing the income for that taxation year of the taxpayer;

• (b) the taxpayer is

  • (i) in the particular taxation year, a beneficiary under the trust, and

  • (ii) resident in Canada, unless the trust is, throughout the particular taxation year, a mutual fund trust;

• (c) the trust is, throughout the particular taxation year, resident in Canada; and

• (d) the total of all amounts each of which is an amount designated, under this subsection, by the trust in respect of a beneficiary under the trust in the trust’s return of income under this Part for the particular taxation year is not greater than the trust’s net taxable capital gains for the particular taxation year.

Marginal note:Late, amended or revoked designation

(21.01) A trust that has filed its return of income for its taxation year that includes February 22, 1994 may subsequently designate an amount under subsection 104(21), or amend or revoke a designation made under that subsection where the designation, amendment or revocation

• (a) is made solely because of an increase or decrease in the net taxable capital gains of the trust for the year that results from an election or revocation to which subsection 110.6(25), 110.6(26) or 110.6(27) applies; and

Marginal note:Late, amended or revoked designation

(21.02) A designation, amendment or revocation under subsection 104(21.01) that affects an amount determined in respect of a beneficiary under subsection 104(21.2) may be made only where the trust

[...]

Marginal note:Late, amended or revoked designation

(21.03) Where a trust designates an amount, or amends or revokes a designation, under subsection 104(21) or 104(21.2) in accordance with subsection 104(21.01),

• (a) the designation or amended designation, as the case may be, is deemed to have been made in the trust’s return of income for the trust’s taxation year that includes February 22, 1994; and

[...]

Marginal note:Beneficiaries’ taxable capital gain

(21.2) Where, for the purposes of subsection (21), a personal trust or a trust referred to in subsection 7(2) designates an amount in respect of a beneficiary in respect of its net taxable capital gains for a taxation year (in this subsection referred to as the “designation year”),

• (a) the trust shall in its return of income under this Part for the designation year designate an amount in respect of its eligible taxable capital gains, if any, for the designation year in respect of the beneficiary equal to the amount determined in respect of the beneficiary under each of subparagraphs 104(21.2)(b)(i) and 104(21.2)(b)(ii); and

• (b) the beneficiary is, for the purposes of section 120.4 and for the purposes of sections 3, 74.3 and 111 as they apply for the purposes of section 110.6,

  • [...]

  • (ii) deemed to have a taxable capital gain for the beneficiary’s taxation year in which the designation year ends

    [...]

    • (B) from a disposition of a capital property that is a qualified small business corporation share (as defined for the purpose of section 110.6) of the beneficiary equal to the amount determined by the formula

      (A × B × F)/(D × E)

      where

      A 

      is the lesser of

      • (I) the amount determined by the formula

        G - H

        where

        G 

        is the total of amounts designated under subsection (21) for the designation year by the trust, and

        H 

        is the total of amounts designated under subsection (13.2) for the designation year by the trust, and

      • (II) the trust’s eligible taxable capital gains for the designation year,

      B 

      is the amount, if any, by which the amount designated under subsection (21) for the designation year by the trust in respect of the beneficiary exceeds the amount designated under subsection (13.2) for the year by the trust in respect of the beneficiary for the taxation year,

      C 

      is the amount, if any, that would be determined under paragraph 3(b) for the designation year in respect of the trust’s capital gains and capital losses if the only properties referred to in that paragraph were properties that, at the time they were disposed of, were qualified farm properties, qualified fishing properties or qualified farm or fishing properties of the trust,

      D 

      is the total of all amounts each of which is the amount determined for B for the designation year in respect of a beneficiary under the trust,

      F 

      is the amount, if any, that would be determined under paragraph 3(b) for the designation year in respect of the trust’s capital gains and capital losses if the only properties referred to in that paragraph were properties that, at the time they were disposed of, were qualified small business corporation shares of the trust, other than qualified farm property, qualified fishing property or qualified farm or fishing property,

[...]

Marginal note:Beneficiaries QFFP taxable capital gain

(21.21) If clause (21.2)(b)(ii)(A) applies to deem, for the purposes of section 110.6, the beneficiary under a trust to have a taxable capital gain (referred to in this subsection as the “QFFP taxable capital gain”) from a disposition of capital property that is qualified farm or fishing property of the beneficiary, for the beneficiary’s taxation year that ends on or after April 21, 2015, and in which the designation year of the trust ends, for the purposes of subsection 110.6(2.2), the beneficiary is, if the trust complies with the requirements of subsection (21.22), deemed to have a taxable capital gain from the disposition of qualified farm or fishing property of the beneficiary on or after April 21, 2015 equal to the amount determined by the formula

Marginal note:Trusts to designate amounts

(21.22) A trust shall determine and designate, in its return of income under this Part for a designation year of the trust, the amount that is determined under subsection (21.21) to be the beneficiary’s taxable capital gain from the disposition on or after April 21, 2015 of qualified farm or fishing property of the beneficiary.

[...]

Marginal note:Net taxable capital gains of trust determined

(21.3) For the purposes of this section, the net taxable capital gains of a trust for a taxation year is the amount, if any, determined by the formula

[...]

Marginal note:Designation in respect of foreign source income

(22) For the purposes of this subsection, subsection (22.1) and section 126, an amount in respect of a trust’s income for a particular taxation year of the trust from a source in a country other than Canada is deemed to be income of a taxpayer, for the taxation year of the taxpayer in which the particular taxation year ends, from that source if

• (a) the amount

  • (i) is designated by the trust, in respect of the taxpayer, in the trust’s return of income under this Part for the particular taxation year, and

  • (ii) may reasonably be considered (having regard to all the circumstances including the terms and conditions of the trust) to be part of the amount that, because of paragraph (13)(a) or subsection (14), was included in computing the income for that taxation year of the taxpayer;

• (b) the taxpayer is in the particular taxation year a beneficiary under the trust;

• (c) the trust is, throughout the particular taxation year, resident in Canada; and

• (d) the total of all amounts each of which is an amount designated, under this subsection in respect of that source, by the trust in respect of a beneficiary under the trust in the trust’s return of income under this Part for the particular taxation year is not greater than the trust’s income for the particular taxation year from that source.

Marginal note:Foreign tax deemed paid by beneficiary

(22.1) Where a taxpayer is a beneficiary under a trust, for the purposes of this subsection and section 126, the taxpayer shall be deemed to have paid as business-income tax or non-business-income tax, as the case may be, for a particular taxation year in respect of a source the amount determined by the formula

Marginal note:Recalculation of trust’s foreign source income

(22.2) For the purpose of section 126, there shall be deducted in computing a trust’s income from a source for a taxation year the total of all amounts deemed, because of designations under subsection 104(22) by the trust for the year, to be income of beneficiaries under the trust from that source.

Marginal note:Recalculation of trust’s foreign tax

(22.3) For the purpose of section 126, there shall be deducted in computing the business-income tax or non-business-income tax paid by a trust for a taxation year in respect of a source the total of all amounts deemed, because of designations under subsection 104(22) by the trust for the year, to be paid by beneficiaries under the trust as business-income tax or non-business-income tax, as the case may be, in respect of the source.

[...]

Marginal note:Deceased beneficiary of graduated rate estate

(23) In the case of a trust that is a graduated rate estate,

• [...]

• (c) the income of a person for a taxation year from the trust shall be deemed to be the person’s benefits from or under the trust for the taxation year or years of the trust that ended in the year determined as provided by this section and section 105; and

• (d) where an individual having income from the trust died after the end of a taxation year of the trust but before the end of the calendar year in which the taxation year ended, the individual’s income from the trust for the period commencing immediately after the end of the taxation year and ending at the time of death shall be included in computing the individual’s income for the individual’s taxation year in which the individual died unless the individual’s legal representative has elected otherwise, in which case the legal representative shall file a separate return of income for the period under this Part and pay the tax for the period under this Part as if

  • [...]

  • (iii) that other person’s only income for the period were the individual’s income from the trust for that period, and

[...]

Marginal note:Pension benefits

(27) If a trust, in a taxation year in which it is resident in Canada and is the graduated rate estate of an individual, receives a superannuation or pension benefit or a benefit out of or under a foreign retirement arrangement and designates, in its return of income for the year under this Part, an amount in respect of a beneficiary under the trust equal to the portion (in this subsection referred to as the “beneficiary’s share”) of the benefit that

• (a) may reasonably be considered (having regard to all the circumstances including the terms and conditions of the trust arrangement) to be part of the amount that, by reason of subsection 104(13), was included in computing the income for a particular taxation year of the beneficiary, and

• (b) was not designated by the trust in respect of any other beneficiary under the trust,

[...]

• [...]

• (d) where the benefit

  • (i) is a single amount (as defined in subsection 147.1(1)), other than an amount that relates to an actuarial surplus, paid by a registered pension plan to the trust as a consequence of the individual’s death and the individual was, at the time of death, a spouse or common-law partner of the beneficiary, or

  • (ii) would be an amount included in the total determined under paragraph 60(j) in respect of the beneficiary for the taxation year of the beneficiary in which the benefit was received by the trust if the benefit had been received by the beneficiary at the time it was received by the trust,

  [...]

• (e) where the benefit is a single amount (as defined in subsection 147.1(1)) paid by a registered pension plan to the trust as a consequence of the individual’s death,

  [...]

(27.1) Where

• (a) a trust, in a taxation year (in this subsection referred to as the “trust year”) in which it is resident in Canada and is the graduated rate estate of an individual, receives an amount from a deferred profit sharing plan as a consequence of the individual’s death,

[...]

• (d) is included under subsection 147(10) in computing the income of the trust for the trust year,

• (e) can reasonably be considered (having regard to all the circumstances including the terms and conditions of the trust arrangement) to be part of the amount that was included under subsection (13) in computing the income for a particular taxation year of a beneficiary under the trust who was, at the time of the death, the individual’s spouse or common-law partner, and

• (f) is designated by the trust in respect of the beneficiary in the trust’s return of income under this Part for the trust year

[...]

Marginal note:Death benefit

(28) If the graduated rate estate of an individual receives an amount on or after the individual’s death in recognition of the individual’s service in an office or employment, the portion of the amount that can reasonably be considered (having regard to all the circumstances including the terms and conditions of the trust arrangement) to be paid or payable at any time to a beneficiary under the estate is deemed

[...]

[...]

Marginal note:Tax under Part XII.2

(30) For the purposes of this Part, there shall be deducted in computing the income of a trust for a taxation year the tax paid by the trust for the year under Part XII.2.

Marginal note:Idem

(31) The amount in respect of a taxation year of a trust that is deemed under subsection 210.2(3) to have been paid by a beneficiary under the trust on account of the beneficiary’s tax under this Part shall, for the purposes of subsection 104(13), be deemed to be an amount in respect of the income of the trust for the year that has become payable by the trust to the beneficiary at the end of the year.

248 (1) In this Act,

alter ego trust

alter ego trust means a trust to which paragraph 104(4)(a) would apply if that paragraph were read without reference to subparagraph 104(4)(a)(iii) and clauses 104(4)(a)(iv)(B) and (C); (fiducie en faveur de soi-même)

amateur athlete trust

amateur athlete trust has the meaning assigned by subsection 143.1(1.2); (fiducie au profit d’un athlète amateur)

annuity

annuity  includes an amount payable on a periodic basis whether payable at intervals longer or shorter than a year and whether payable under a contract, will or trust or otherwise; (rente)

balance-due day

balance-due day  of a taxpayer for a taxation year means,

• (a) if the taxpayer is a trust,

  • (i) in the case where the time at which the taxation year ends is determined under paragraph 249(4)(a), the day that is

    • (A) in the case where that time occurs in a calendar year after the end of the trust’s particular taxation year that ends on December 15 of that calendar year because of an election made under paragraph 132.11(1)(a), the balance-due day of the trust for the particular taxation year,

    • (B) in the case where clause (A) does not apply and the trust’s particular taxation year that begins immediately after that time ends in the calendar year that includes that time, the balance-due day of the trust for the particular taxation year, and

benefit under a deferred profit sharing plan

benefit under a deferred profit sharing plan  received by a taxpayer in a taxation year means the total of all amounts each of which is an amount received by the taxpayer in the year from a trustee under the plan, minus any amounts deductible under subsections 147(11) and 147(12) in computing the income of the taxpayer for the year; (prestation en vertu d’un régime de participation différée aux bénéfices)

business number

business number  means the number (other than a Social Insurance Number or trust account number) used by the Minister to identify

[...]

Canadian real, immovable or resource property

Canadian real, immovable or resource property  means

• [...]

• (d) a share of the capital stock of a corporation, an income or a capital interest in a trust or an interest in a partnership — other than a taxable Canadian corporation, a SIFT trust (determined without reference to subsection 122.1(2)), a SIFT partnership (determined without reference to subsection 197(8)) or a real estate investment trust (as defined in subsection 122.1(1)) — if more than 50% of the fair market value of the share or interest is derived directly or indirectly from one or any combination of properties described in paragraphs (a) to (c), or

capital interest

capital interest  of a taxpayer in a trust has the meaning assigned by subsection 108(1); (participation au capital)

cemetery care trust

cemetery care trust has the meaning assigned by subsection 148.1(1); (fiducie pour l’entretien d’un cimetière)

cost amount

cost amount  to a taxpayer of any property at any time means, except as expressly otherwise provided in this Act,

• [...]

• (e.2) where the property is an interest of a beneficiary under a qualifying environmental trust, nil, and

[...]

deferred amount

deferred amount  at the end of a taxation year under a salary deferral arrangement in respect of a taxpayer means

• (a) in the case of a trust governed by the arrangement, any amount that a person has a right under the arrangement at the end of the year to receive after the end of the year where the amount has been received, is receivable or may at any time become receivable by the trust as, on account or in lieu of salary or wages of the taxpayer for services rendered in the year or a preceding taxation year, and

[...]

derivative forward agreement

derivative forward agreement , of a taxpayer, means an agreement entered into by the taxpayer to purchase or sell a capital property if

• [...]

• (b) in the case of a purchase agreement, the difference between the fair market value of the property delivered on settlement, including partial settlement, of the agreement and the amount paid for the property is attributable, in whole or in part, to an underlying interest (including a value, price, rate, variable, index, event, probability or thing) other than

  • (i) revenue, income or cashflow in respect of the property over the term of the agreement, changes in the fair market value of the property over the term of the agreement, or any similar criteria in respect of the property unless

    • [...]

    • (C) it can reasonably be considered that one of the main purposes of the series of transactions or events, or any transaction or event in the series, of which the agreement is part is for all or any portion of the capital gain on a disposition (other than a disposition by the seller to the taxpayer under the agreement) of a Canadian security referred to in clause (A) — as part of the same series of transactions or events — to be attributable to amounts paid or payable on the Canadian security by the issuer of the Canadian security during the term of the agreement as

      • [...]

      • (III) income of a trust other than income paid out of the taxable capital gains of the trust,

disposition

disposition  of any property, except as expressly otherwise provided, includes

• [...]

• (b) any transaction or event by which,

  • [...]

  • (v) a trust, that can reasonably be considered to act as agent for all the beneficiaries under the trust with respect to all dealings with all of the trust’s property (unless the trust is described in any of paragraphs (a) to (e.1) of the definition trust in subsection 108(1)), ceases to act as agent for a beneficiary under the trust with respect to any dealing with any of the trust’s property,

• [...]

• (c) any transfer of the property to a trust or, where the property is property of a trust, any transfer of the property to any beneficiary under the trust, except as provided by paragraph (f) or (k), and

• (d) where the property is, or is part of, a taxpayer’s capital interest in a trust, except as provided by paragraph (h) or (i), a payment made after 1999 to the taxpayer from the trust that can reasonably be considered to have been made because of the taxpayer’s capital interest in the trust,

[...]

• (e) any transfer of the property as a consequence of which there is no change in the beneficial ownership of the property, except where the transfer is

  • (i) from a person or a partnership to a trust for the benefit of the person or the partnership,

  • (ii) from a trust to a beneficiary under the trust, or

  • (iii) from one trust maintained for the benefit of one or more beneficiaries under the trust to another trust maintained for the benefit of the same beneficiaries,

• (f) any transfer of the property as a consequence of which there is no change in the beneficial ownership of the property, where

  • (i) the transferor and the transferee are trusts that are, at the time of the transfer, resident in Canada,

  • [...]

  • (iii) the transferee does not receive the property in satisfaction of the transferee’s right as a beneficiary under the transferor trust,

  • [...]

  • (vi) if the transferor is an amateur athlete trust, a cemetery care trust, an employee trust, a trust deemed by subsection 143(1) to exist in respect of a congregation that is a constituent part of a religious organization, a related segregated fund trust (in this paragraph having the meaning assigned by section 138.1), a trust described in paragraph 149(1)(o.4) or a trust governed by an eligible funeral arrangement, an employees profit sharing plan, a FHSA, a registered disability savings plan, a registered education savings plan, a registered supplementary unemployment benefit plan or a TFSA, the transferee is the same type of trust, and

• [...]

• (h) where the property is part of a capital interest of a taxpayer in a trust (other than a personal trust or a trust prescribed for the purpose of subsection 107(2)) that is described by reference to units issued by the trust, a payment after 1999 from the trust in respect of the capital interest, where the number of units in the trust that are owned by the taxpayer is not reduced because of the payment,

• (i) where the property is a taxpayer’s capital interest in a trust, a payment to the taxpayer after 1999 in respect of the capital interest to the extent that the payment

  • (i) is out of the income of the trust (determined without reference to subsection 104(6)) for a taxation year or out of the capital gains of the trust for the year, if the payment was made in the year or the right to the payment was acquired by the taxpayer in the year, or

  • (ii) is in respect of an amount designated in respect of the taxpayer by the trust under subsection 104(20),

• [...]

• (k) any transfer of the property to a trust as a consequence of which there is no change in the beneficial ownership of the property, where the main purpose of the transfer is

  [...]

dividend

dividend  includes a stock dividend (other than a stock dividend that is paid to a corporation or to a mutual fund trust by a non-resident corporation); (dividende)

DRA share

DRA share , of a person or partnership, means a share

• [...]

• (c) that is held by a trust under which the person or partnership is a beneficiary and in respect of which the person or partnership is deemed to have received a dividend as a result of a designation by the trust under subsection 104(19),

employee benefit plan

employee benefit plan  means an arrangement under which contributions are made by an employer or by any person with whom the employer does not deal at arm’s length to another person (in this Act referred to as the “custodian” of an employee benefit plan) and under which one or more payments are to be made to or for the benefit of employees or former employees of the employer or persons who do not deal at arm’s length with any such employee or former employee (other than a payment that, if section 6 were read without reference to subparagraph 6(1)(a)(ii) and paragraph 6(1)(g), would not be required to be included in computing the income of the recipient or of an employee or former employee), but does not include any portion of the arrangement that is

• (a) a fund, plan or trust referred to in subparagraph 6(1)(a)(i) or paragraph 6(1)(d) or (f),

• (b) a trust described in paragraph 149(1)(y),

• (b.1) an employee ownership trust,

• (c) an employee trust,

employee life and health trust

employee life and health trust has the meaning assigned by subsection 144.1(2); (fiducie de soins de santé au bénéfice d’employés)

employee ownership trust

employee ownership trust means an irrevocable trust that, at all relevant times, satisfies the following conditions:

• (a) the trust is resident in Canada (determined without reference to subsection 94(3)),

• (b) the trust is exclusively for the benefit of all individuals each of whom

  • (i) is either

    • (A) an employee of one or more qualifying businesses controlled by the trust (other than an employee who has not completed an applicable probationary period, which may not exceed 12 months), or

    • (B) if the trust permits, an individual (or the estate of an individual) who is a former employee (other than a former employee who did not complete an applicable probationary period, of up to 12 months, during their employment) of one or more qualifying businesses controlled by the trust and who was an employee of the qualifying business while the trust controlled the qualifying business,

  • (ii) does not own, directly or indirectly (other than through an interest in the trust), shares of a class of the capital stock of a qualifying business controlled by the trust, the value of which is equal to or greater than 10% of the fair market value of the class,

  • (iii) does not own, directly or indirectly, together with any person or partnership that is related to or affiliated with the individual, shares of a class of the capital stock of a qualifying business controlled by the trust, the value of which is equal to or greater than 50% of the fair market value of the class,

  • (iv) immediately before the time of a qualifying business transfer to the trust, did not own, directly or indirectly, together with any person or partnership that is related to or affiliated with the individual, shares of the capital stock or indebtedness of the qualifying business, the value of which is equal to or greater than 50% of the fair market value of the shares of the capital stock and indebtedness of the qualifying business, and

  • (v) is not an individual who claimed, or is related to an individual who claimed, a deduction under subsection 110.61(2) in respect of a qualifying business controlled by the trust;

• [...]

• (d) the trustees are prohibited from exercising their discretion to act in the interest of one beneficiary (or group of beneficiaries) to the prejudice of another beneficiary (or group of beneficiaries),

• (e) each trustee of the trust is either a corporation resident in Canada that is licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as a trustee or an individual (other than a trust),

• (f) each trustee has an equal vote in the conduct of the affairs of the trust,

• (g) at least one-third of the trustees must be beneficiaries described in clause (b)(i)(A),

• (h) if any trustee is appointed (other than by an election within the last five years by the beneficiaries described in clause (b)(i)(A)), at least 60% of all trustees must be persons that deal at arm’s length with each person who has, directly or indirectly in any manner whatever, as part of a transaction or event or series of transactions or events, sold shares of a qualifying business to the trust (or to any person or partnership affiliated with the trust) prior to or in connection with the trust acquiring control of the qualifying business,

• (i) more than 50% of the beneficiaries of the trust described in clause (b)(i)(A) must approve each of the following transactions or events prior to their occurrence:

  [...]

• (j) all or substantially all the fair market value of the property of the trust is attributable to shares of the capital stock of one or more qualifying businesses that the trust controls; (fiducie collective des employés)

employee trust

employee trust means an arrangement (other than an employee ownership trust, an employees profit sharing plan, a deferred profit sharing plan or a plan referred to in subsection 147(15) as a “revoked plan”) established after 1979

• (a) under which payments are made by one or more employers to a trustee in trust solely to provide to employees or former employees of

  [...]

• (b) under which the trustee has, since the commencement of the arrangement, each year allocated to individuals who are beneficiaries thereunder, in such manner as is reasonable, the amount, if any, by which the total of all amounts each of which is

  • (i) an amount received under the arrangement by the trustee in the year from an employer or from a person with whom the employer does not deal at arm’s length,

  • (ii) the amount that would, if this Act were read without reference to subsection 104(6), be the income of the trust for the year (other than a taxable capital gain from the disposition of property) from a property or other source other than a business, or

  • (iii) a capital gain of the trust for the year from the disposition of property

  [...]

  • (iv) the loss of the trust for the year (other than an allowable capital loss from the disposition of property) from a property or other source other than a business, or

  • (v) a capital loss of the trust for the year from the disposition of property, and

• (c) the trustee of which has elected to qualify the arrangement as an employee trust in its return of income filed within 90 days from the end of its first taxation year; (fiducie d’employés)

foreign resource property

foreign resource property  has the meaning assigned by subsection 66(15), and a foreign resource property in respect of a country means a foreign resource property that is

• [...]

• (g) a right to or an interest in — or for civil law a right to or in — any property described in any of paragraphs (a) to (e), other than a right or an interest that the taxpayer has because the taxpayer is a beneficiary under a trust or a member of a partnership, or

• (h) an interest in real property described in paragraph (f) or a real right in an immovable described in that paragraph, other than an interest or a right that the taxpayer has because the taxpayer is a beneficiary under a trust or a member of a partnership; (avoir minier étranger)

graduated rate estate

graduated rate estate , of an individual at any time, means the estate that arose on and as a consequence of the individual’s death if

• [...]

• (b) the estate is at that time a testamentary trust,

income bond

income bond or income debenture  of a corporation (in this definition referred to as the “issuing corporation”) means a bond or debenture in respect of which interest or dividends are payable only to the extent that the issuing corporation has made a profit before taking into account the interest or dividend obligation and that was issued

• [...]

• (c) by an issuing corporation resident in Canada for a term that may not, in any circumstances, exceed 5 years,

  • [...]

  • (ii) at a time when all or substantially all of its assets were under the control of a receiver, receiver-manager, sequestrator or trustee in bankruptcy, or

  [...]

[...]

• [...]

• (e) where

  • [...]

  • (ii) under the terms or conditions of a bond or debenture acquired in the ordinary course of the business carried on by a specified financial institution or a partnership or trust (other than a testamentary trust) or under the terms or conditions of any agreement relating to any such bond or debenture (other than an agreement made before October 24, 1979 to which the issuing corporation or any person related thereto was not a party), the owner thereof could at any particular time after November 16, 1978 require, either alone or together with one or more taxpayers, the repayment, acquisition, cancellation or conversion of the bond or debenture otherwise than by reason of a failure or default under the terms or conditions of the bond or debenture or any agreement that related to, and was entered into at the time of, the issuance of the bond or debenture,

  • [...]

  • (iv) at a particular time a specified financial institution (or a partnership or trust of which a specified financial institution or a person related to the institution is a member or beneficiary) acquires a bond or debenture that

    [...]

  • (v) at a particular time after November 12, 1981, a specified financial institution (or a partnership or trust of which a specified financial institution or a person related to the institution is a member or beneficiary) acquires a bond or debenture that

    [...]

  [...]

income interest

income interest  of a taxpayer in a trust has the meaning assigned by subsection 108(1); (participation au revenu)

international shipping

international shipping  means the operation of a ship owned or leased by a person or partnership (in this definition referred to as the “operator”) that is used, either directly or as part of a pooling arrangement, primarily in transporting passengers or goods in international traffic — determined as if, except where paragraph (c) of the definition international traffic in this subsection applies, any port or other place on the Great Lakes or St. Lawrence River is in Canada — including the chartering of the ship, provided that one or more persons related to the operator (if the operator and each such person is a corporation), or persons or partnerships affiliated with the operator (in any other case), has complete possession, control and command of the ship, and any activity incident to or pertaining to the operation of the ship, but does not include

• [...]

• (i) leasing a ship by a lessor to a lessee that has complete possession, control and command of the ship, unless the lessor or a corporation, trust or partnership affiliated with the lessor has an eligible interest (as defined in subsection 250(6.04)) in the lessee; (transport maritime international)

inter vivostrust

inter vivostrust has the meaning assigned by subsection 108(1); (fiducie non testamentaire)

joint spousal or common-law partner trust

joint spousal or common-law partner trust means a trust to which paragraph 104(4)(a) would apply if that paragraph were read without reference to subparagraph 104(4)(a)(iii) and clause 104(4)(a)(iv)(A); (fiducie mixte au profit de l’époux ou du conjoint de fait)

legal representative

legal representative  of a taxpayer means a trustee in bankruptcy, an assignee, a liquidator, a curator, a receiver of any kind, a trustee, an heir, an administrator, an executor, a liquidator of a succession, a committee, or any other like person, administering, winding up, controlling or otherwise dealing in a representative or fiduciary capacity with the property that belongs or belonged to, or that is or was held for the benefit of, the taxpayer or the taxpayer’s estate; (représentant légal)

mining reclamation trust

mining reclamation trust[Repealed, 1998, c. 19, s. 66]

mutual fund trust

mutual fund trust has the meaning assigned by subsection 132(6); (fiducie de fonds commun de placement)

net corporate income tax rate

net corporate income tax rate  in respect of a SIFT trust or SIFT partnership for a taxation year means the amount, expressed as a decimal fraction, by which

[...]

• (b) the total of

  • (i) the percentage that would, if the SIFT trust or SIFT partnership were a corporation, be its general rate reduction percent- age, within the meaning assigned by subsection 123.4(1), for the taxation year, and

personal or living expenses

personal or living expenses  includes

• [...]

• (c) expenses of properties maintained by an estate or trust for the benefit of the taxpayer as one of the beneficiaries; (frais personnels ou de subsistance)

personal trust

personal trust means a trust (other than a trust that is, or was at any time after 1999, a unit trust) that is

• [...]

• (b) a trust in which no beneficial interest was acquired for consideration payable directly or indirectly to

  • (i) the trust, or

  • (ii) any person or partnership that has made a contribution to the trust by way of transfer, assignment or other disposition of property; (fiducie personnelle)

post-1971 spousal or common-law partner trust

post-1971 spousal or common-law partner trust means a trust that would be described in paragraph 104(4)(a) if that paragraph were read without reference to subparagraph 104(4)(a)(iv); (fiducie au profit de l’époux ou du conjoint de fait postérieure à 1971)

provincial SIFT tax rate

provincial SIFT tax rate  of a SIFT trust or a SIFT partnership for a taxation year means the prescribed amount determined in respect of the SIFT trust or SIFT partnership for the taxation year; (taux d’imposition provincial des EIPD)

qualified Canadian journalism organization

qualified Canadian journalism organization , at any time, means a corporation, partnership or trust that

• (a) meets the following conditions:

  • [...]

  • (iii) in the case of a trust,

    • [...]

    • (C) if interests as a beneficiary under the trust are held by one or more persons or partnerships, at least 75% of the fair market value of all interests as a beneficiary under the trust are held by

      [...]

qualifying business

qualifying business , at a particular time, means a corporation controlled by a trust

• [...]

• (b) not more than 40% of the directors of which consist of individuals that, immediately before the time that the trust acquired control of the corporation, owned, directly or indirectly, together with any person or partnership that is related to or affiliated with the director, 50% or more of the fair market value of the shares of the capital stock or indebtedness of the corporation, and

• (c) that deals at arm’s length and is not affiliated with any person or partnership that owned, directly or indirectly, 50% or more of the fair market value of the shares of the capital stock or indebtedness of the corporation immediately before the time the trust acquired control of the corporation; (entreprise admissible)

qualifying business transfer

qualifying business transfer  means a disposition by a taxpayer of shares of the capital stock of a corporation (in this definition referred to as the “subject corporation”) to a trust, or to a Canadian-controlled private corporation (in this definition referred to as the “purchaser corporation”) that is controlled and wholly-owned by a trust, if 

• [...]

• (b) at the time of the disposition,

  • (i) the taxpayer deals at arm’s length with the trust and any purchaser corporation,

  • (ii) the trust acquires control of the subject corporation, and

  • (iii) the trust is an employee ownership trust, the beneficiaries of which are employed in the business, and

• (c) at all times after the disposition,

  • (i) the taxpayer deals at arm’s length with the subject corporation, the trust and any purchaser corporation, and

  • (ii) the taxpayer does not retain any right or influence that, if exercised, would allow the taxpayer (whether alone or together with any person or partnership that is related to or affiliated with the taxpayer) to control, directly or indirectly in any manner whatever, the subject corporation, the trust, or any purchaser corporation; (transfert admissible d’entreprise)

qualifying environmental trust

qualifying environmental trust has the meaning assigned by subsection 211.6(1); (fiducie pour l’environnement admissible)

qualifying trust annuity

qualifying trust annuity  has the meaning assigned by subsection 60.011(2); (rente admissible de fiducie)

restricted financial institution

restricted financial institution  means

• [...]

• (b) a corporation licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee,

retirement compensation arrangement

retirement compensation arrangement  means a plan or arrangement under which contributions (other than payments made to acquire an interest in a life insurance policy) are made by an employer or former employer of a taxpayer, or by a person with whom the employer or former employer does not deal at arm’s length, to another person or partnership (in this definition and in Part XI.3 referred to as the “custodian”) in connection with benefits that are to be or may be received or enjoyed by any person on, after or in contemplation of any substantial change in the services rendered by the taxpayer, the retirement of the taxpayer or the loss of an office or employment of the taxpayer, but does not include

• [...]

• (f) an employee trust,

• (f.1) an employee life and health trust,

• [...]

• (i) a vacation pay trust described in paragraph 149(1)(y),

• (j) a plan or arrangement established for the purpose of deferring the salary or wages of a professional athlete for his services as such with a team that participates in a league having regularly scheduled games (in this definition referred to as an “athlete’s plan”), where

  • [...]

  • (ii) in the case of a Canadian team, the custodian of the plan or arrangement carries on business through a fixed place of business in Canada and is licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee,

and, for the purposes of this definition, where a particular person holds property in trust under an arrangement that, if the property were held by another person, would be a retirement compensation arrangement, the arrangement shall be deemed to be a retirement compensation arrangement of which the particular person is the custodian; (convention de retraite)

salary deferral arrangement

salary deferral arrangement , in respect of a taxpayer, means a plan or arrangement, whether funded or not, under which any person has a right in a taxation year to receive an amount after the year where it is reasonable to consider that one of the main purposes for the creation or existence of the right is to postpone tax payable under this Act by the taxpayer in respect of an amount that is, or is on account or in lieu of, salary or wages of the taxpayer for services rendered by the taxpayer in the year or a preceding taxation year (including such a right that is subject to one or more conditions unless there is a substantial risk that any one of those conditions will not be satisfied), but does not include

• [...]

• (e) an employee trust,

• (e.1) an employee life and health trust,

• [...]

• (h) a vacation pay trust described in paragraph 149(1)(y),

short-term preferred share

short-term preferred share  of a corporation at any particular time means a share, other than a grandfathered share, of the capital stock of the corporation issued after December 15, 1987 that at that particular time

[...]

• [...]

• (h) where at any particular time after December 15, 1987, otherwise than pursuant to a written arrangement to do so entered into before December 16, 1987, as a result of the terms or conditions of a share of the capital stock of a corporation or any agreement entered into by the corporation or a specified person in relation to the corporation, any person (other than the corporation or an individual other than a trust) was obligated, either absolutely or contingently and either immediately or in the future, to effect any undertaking within 5 years after the day on which the share was issued (in this paragraph referred to as a “guarantee agreement”) including any guarantee, covenant or agreement to purchase or repurchase the share, and including the lending of funds or the placing of amounts on deposit with, or on behalf of the shareholder or a specified person in relation to the shareholder given

  [...]

SIFT trust

SIFT trust has the meaning assigned by section 122.1; (fiducie intermédiaire de placement déterminée)

SIFT trust wind-up event

SIFT trust wind-up event  means a distribution by a particular trust resident in Canada of property to a taxpayer in respect of which the following conditions are met:

• [...]

• (b) there is a resulting disposition of all of the taxpayer’s interest as a beneficiary under the particular trust,

• (c) the particular trust is

  • [...]

  • (ii) a trust whose only beneficiary throughout the period (referred to in this definition as the “qualifying period”) that begins on July 14, 2008 and that ends at the time of the distribution is another trust that throughout the qualifying period

    • [...]

    • (B) is a SIFT wind-up entity or a trust described by this subparagraph, or

  • (iii) a trust whose only beneficiary at the time of distribution is another trust that throughout the qualifying period

    • [...]

    • (B) is a SIFT wind-up entity or a trust described by subparagraph (ii), and

    • (C) is a majority interest beneficiary (within the meaning that would be assigned by section 251.1 if the references in the definition majority interest beneficiary in subsection 251.1(3) to “50%” were read as references to “25%”) of the particular trust,

• (d) the particular trust ceases to exist immediately after the distribution or immediately after the last of a series of SIFT trust wind-up events (determined without reference to this paragraph) of the particular trust that includes the distribution, and

• (e) the property was not acquired by the particular trust as a result of a transfer or an exchange

  [...]

SIFT wind-up corporation

SIFT wind-up corporation , in respect of a SIFT wind-up entity, means at any particular time a corporation

• [...]

• (b) shares of the capital stock of which are at or before the particular time distributed on a SIFT trust wind-up event of the SIFT wind-up entity; (société de conversion d’EIPD)

SIFT wind-up entity

SIFT wind-up entity  means a trust or partnership that at any time in the period that began on October 31, 2006 and that ends on July 14, 2008 is

• (a) a SIFT trust (determined without reference to subsection 122.1(2)),

• [...]

• (c) a real estate investment trust (as defined in subsection 122.1(1)); (EIPD convertible)

SIFT wind-up entity equity

SIFT wind-up entity equity , or equity in a SIFT wind-up entity, means

• (a) if the SIFT wind-up entity is a trust, a capital interest (determined without reference to subsection (25)) in the trust, and

[...]

specified financial institution

specified financial institution , at any time, means

• [...]

• (b) a corporation licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee,

specified mutual fund trust

specified mutual fund trust, at any time, means a mutual fund trust other than a mutual fund trust for which it can reasonably be considered, having regard to all the circumstances, including the terms and conditions of the units of the trust, that the total of all amounts each of which is the fair market value, at that time, of a unit issued by the trust and held by a person exempt from tax under section 149 is all or substantially all of the total of all amounts each of which is the fair market value, at that time, of a unit issued by the trust; (fiducie de fonds commun de placement déterminée)

specified shareholder

specified shareholder  of a corporation in a taxation year means a taxpayer who owns, directly or indirectly, at any time in the year, not less than 10% of the issued shares of any class of the capital stock of the corporation or of any other corporation that is related to the corporation and, for the purposes of this definition,

• [...]

• (b) each beneficiary of a trust shall be deemed to own that proportion of all such shares owned by the trust at that time that the fair market value at that time of the beneficial interest of the beneficiary in the trust is of the fair market value at that time of all beneficial interests in the trust,

• [...]

• (e) notwithstanding paragraph (b), where a beneficiary’s share of the income or capital of the trust depends on the exercise by any person of, or the failure by any person to exercise, any discretionary power, the beneficiary shall be deemed to own each share of the capital stock of a corporation owned at that time by the trust; (actionnaire déterminé)

specified unitholder

specified unitholder , of a partnership or trust (referred to in this definition as the “entity”), the interests in which are described by reference to units, means a taxpayer who would be a specified shareholder of the entity if the entity were a corporation and each unit of the entity were a share of a class of the corporation having the same attributes as the unit; (détenteur d’unité déterminé)

taxable Canadian property

taxable Canadian property  of a taxpayer at any time in a taxation year means a property of the taxpayer that is

• [...]

• (d) a share of the capital stock of a corporation (other than a mutual fund corporation) that is not listed on a designated stock exchange, an interest in a partnership or an interest in a trust (other than a unit of a mutual fund trust or an income interest in a trust resident in Canada), if, at any particular time during the 60-month period that ends at that time, more than 50% of the fair market value of the share or interest, as the case may be, was derived directly or indirectly (otherwise than through a corporation, partnership or trust the shares or interests in which were not themselves taxable Canadian property at the particular time) from one or any combination of

  [...]

• (e) a share of the capital stock of a corporation that is listed on a designated stock exchange, a share of the capital stock of a mutual fund corporation or a unit of a mutual fund trust, if, at any particular time during the 60-month period that ends at that time,

  • (i) 25% or more of the issued shares of any class of the capital stock of the corporation, or 25% or more of the issued units of the trust, as the case may be, were owned by or belonged to one or any combination of

    [...]

[...]

• [...]

• (i) an income interest in a trust resident in Canada,

taxable preferred share

taxable preferred share  at any particular time means

[...]

• [...]

• (h)  specified person , in relation to any particular person, means another person with whom the particular person does not deal at arm’s length or any partnership or trust of which the particular person or the other person is a member or beneficiary, respectively; (action privilégiée imposable)

tax-indifferent investor

tax-indifferent investor , at any time, means a person or partnership that is at that time

• [...]

• (c) a trust resident in Canada (other than a specified mutual fund trust) if any of the interests as a beneficiary under the trust is not a fixed interest (as defined in subsection 251.2(1)) in the trust (in this definition referred to as a discretionary trust),

• (d) a partnership more than 10% of the fair market value of all interests in which can reasonably be considered to be held, directly or indirectly through one or more trusts or partnerships, by any combination of persons described in paragraphs (a) to (c), or

• (e) a trust resident in Canada (other than a specified mutual fund trust or a discretionary trust) if more than 10% of the fair market value of all interests as beneficiaries under the trust can reasonably be considered to be held, directly or indirectly through one or more trusts or partnerships, by any combination of persons described in paragraph (a) or (c); (investisseur indifférent relativement à l’impôt)

term preferred share

term preferred share  of a corporation (in this definition referred to as the issuing corporation) means a share of a class of the capital stock of the issuing corporation if the share was issued or acquired after June 28, 1982 and, at the time the share was issued or acquired, the existence of the issuing corporation was, or there was an arrangement under which it could be, limited or, in the case of a share issued after November 16, 1978 if

• [...]

• (b) the owner thereof acquired the share after October 23, 1979 and is

  • [...]

  • (iv) a partnership or trust of which a corporation referred to in subparagraph (i) or (ii) or a person related thereto is a member or a beneficiary,

  that (either alone or together with any of such corporations, partnerships or trusts) controls or has an absolute or contingent right to control or to acquire control of the issuing corporation,

[...]

• [...]

• (e) for a period not exceeding ten years and, in the case of a share issued after November 12, 1981, for a period not exceeding five years, from the date of its issuance, which share was issued by a corporation resident in Canada,

  • [...]

  • (ii) at a time when all or substantially all of its assets were under the control of a receiver, receiver-manager, sequestrator or trustee in bankruptcy, or

  [...]

[...]

• [...]

• (h) where

  • [...]

  • (iv) at a particular time after October 23, 1979 and before November 13, 1981, a specified financial institution (or a partnership or trust of which a specified financial institution or a person related to the institution is a member or beneficiary) acquired a share that

    [...]

  • [...]

  • (vi) at a particular time after November 12, 1981, a specified financial institution (or a partnership or trust of which a specified financial institution or a person related to the institution is a member or beneficiary) acquired a share (other than a share referred to in paragraph (e)) that

    [...]

  [...]

• (i) where the terms or conditions of a share of the capital stock of the issuing corporation are modified or established after June 28, 1982 and as a consequence thereof the issuing corporation, any person related thereto or any partnership or trust of which the issuing corporation or a person related thereto is a member or a beneficiary may reasonably be expected at any time to redeem, acquire or cancel, in whole or in part, the share or to reduce its paid-up capital, the share shall be deemed as from the date of the modification or as from the date of the establishment, as the case may be, to be a share described in paragraph (a),

testamentary trust

testamentary trust has the meaning assigned by subsection 108(1); (fiducie testamentaire)

trust

trust has the meaning assigned by subsection 104(1) and, unless the context otherwise requires, includes an estate; (fiducie)

trust account number

trust account number  means the number (other than a business number)

• (a) used by the Minister to identify a trust, and

• (b) of which the Minister has notified the trust; (numéro de compte en fiducie)

unit trust

unit trust has the meaning assigned by subsection 108(2); (fiducie d’investissement à participation unitaire)

[...]

(3) For the purposes of this Act, if property is subject to an institution or arrangement that is described by this subsection and that is governed by the laws of the Province of Quebec, the following rules apply in respect of the property:

• (a) if at any time property is subject to a usufruct, right of use or habitation, or substitution,

  • (i) the usufruct, right of use or habitation, or substitution, as the case may be, is deemed to be at that time

    • (A) a trust, and

    • (B) where the usufruct, right of use or habitation, or substitution, as the case may be, is created by will, a trust created by will,

  • (ii) the property is deemed

    • (A) where the usufruct, right of use or habitation, or substitution, as the case may be, arises on the death of a testator, to have been transferred to the trust on and as a consequence of the death of the testator, and not otherwise, and

    • (B) where the usufruct, right of use or habitation, or substitution, as the case may be, arises otherwise, to have been transferred (at the time it first became subject to the usufruct, right of use or habitation, or substitution, as the case may be) to the trust by the person that granted the usufruct, right of use or habitation, or substitution, and

  • (iii) the property is deemed to be, throughout the period in which it is subject to the usufruct, right of use or habitation, or substitution, as the case may be, held by the trust, and not otherwise;

• (b) an arrangement (other than a partnership, a qualifying arrangement or an arrangement that is a trust determined without reference to this paragraph) is deemed to be a trust and property subject to rights and obligations under the arrangement is, if the arrangement is deemed by this paragraph to be a trust, deemed to be held in trust and not otherwise, where the arrangement

  • (i) is established before October 31, 2003 by or under a written contract that

    • [...]

    • (B) provides that, for the purposes of this Act, the arrangement shall be considered to be a trust, and

  • (ii) creates rights and obligations that are substantially similar to the rights and obligations under a trust (determined without reference to this subsection);

• (c) if the arrangement is a qualifying arrangement,

  • (i) the arrangement is deemed to be a trust,

  • (ii) any property contributed at any time to the arrangement by an annuitant, a holder or a subscriber of the arrangement, as the case may be, is deemed to have been transferred, at that time, to the trust by the contributor, and

  • (iii) property subject to rights and obligations under the arrangement is deemed to be held in trust and not otherwise;

• (d) a person who has a right (whether immediate or future and whether absolute or contingent) to receive all or part of the income or capital in respect of property that is referred to in paragraph (a) or (b) is deemed to be beneficially interested in the trust; and

• (e) notwithstanding that a property is at any time subject to a servitude, the property is deemed to be beneficially owned by a person at that time if, at that time, the person has in relation to the property

  • [...]

  • (iii) a right as a beneficiary in a trust.

[...]

(3.2) For the purposes of paragraphs 248(3)(b) and (c), an arrangement is a qualifying arrangement if it is

• (a) entered into with a corporation that is licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee;

• [...]

• (c) presented as a declaration of trust or provides that, for the purposes of this Act, it shall be considered to be a trust; and

[...]

Marginal note:How trust created

(9.1) For the purposes of this Act, a trust shall be considered to be created by a taxpayer’s will if the trust is created

[...]

(9.2) For the purposes of this Act, property shall be deemed not to have vested indefeasibly

• (a) in a trust under which a taxpayer’s spouse or common-law partner is a beneficiary, where the trust is created by the will of the taxpayer, unless the property vested indefeasibly in the trust before the death of the spouse or common-law partner; and

• (b) in an individual (other than a trust), unless the property vested indefeasibly in the individual before the death of the individual.

[...]

Marginal note:Interests in trusts and partnerships

(13) Where after November 12, 1981 a person has an interest in a trust or partnership, whether directly or indirectly through an interest in any other trust or partnership or in any manner whatever, the person shall, for the purposes of the definitions income bond, income debenture and term preferred share in subsection 248(1), paragraph (h) of the definition taxable preferred share in that subsection, subsections 84(4.2) and 84(4.3) and 112(2.6) and section 258, be deemed to be a beneficiary of the trust or a member of the partnership, as the case may be.

[...]

(25) For the purposes of this Act,

• (a) a person or partnership beneficially interested in a particular trust includes any person or partnership that has any right (whether immediate or future, whether absolute or contingent or whether conditional on or subject to the exercise of any discretion by any person or partnership) as a beneficiary under a trust to receive any of the income or capital of the particular trust either directly from the particular trust or indirectly through one or more trusts or partnerships;

• (b) except for the purpose of this paragraph, a particular person or partnership is deemed to be beneficially interested in a particular trust at a particular time where

  • (i) the particular person or partnership is not beneficially interested in the particular trust at the particular time,

  • (ii) because of the terms or conditions of the particular trust or any arrangement in respect of the particular trust at the particular time, the particular person or partnership might, because of the exercise of any discretion by any person or partnership, become beneficially interested in the particular trust at the particular time or at a later time, and

  • (iii) at or before the particular time, either

    • (A) the particular trust has acquired property, directly or indirectly in any manner whatever, from

      [...]

    • (B) a person or partnership described in any of subclauses 248(25)(b)(iii)(A)(I) to 248(25)(b)(iii)(A)(V) has given a guarantee on behalf of the particular trust or provided any other financial assistance whatever to the particular trust; and

• (c) a member of a partnership that is beneficially interested in a trust is deemed to be beneficially interested in the trust.

Marginal note:Trust-to-trust transfers

(25.1) If, at any time, a particular trust transfers property to another trust (other than a trust governed by a registered retirement savings plan or by a registered retirement income fund) in circumstances to which paragraph (f) of the definition disposition in subsection (1) applies, without affecting the personal liabilities under this Act of the trustees of either trust or the application of subsection 104(5.8),

• (a) the other trust is deemed to be after that time the same trust as, and a continuation of, the particular trust; and

• (b) for greater certainty, if, as a result of a transaction or event, the property was deemed to be taxable Canadian property of the particular trust by any of paragraphs 51(1)(f), 85(1)(i) and 85.1(1)(a), subsection 85.1(5), paragraph 85.1(8)(b), subsections 87(4) and (5) and paragraphs 97(2)(c) and 107(3.1)(d), the property is also deemed to be, at any time that is within 60 months after the transaction or event, taxable Canadian property of the other trust.

Marginal note:Trusts to ensure obligations fulfilled

(25.2) Except for the purpose of this subsection, where at any time property is transferred to a trust in circumstances to which paragraph (k) of the definition disposition in subsection (1) applies, the trust is deemed to deal with the property as agent for the transferor throughout the period that begins at the time of the transfer and ends at the time of the first change after that time in the beneficial ownership of the property.

Marginal note:Cost of trust interest

(25.3) The cost to a taxpayer of a particular unit of a trust is deemed to be equal to the amount described in paragraph (a) where

• (a) the trust issues the particular unit to the taxpayer directly in satisfaction of a right to enforce payment of an amount by the trust in respect of the taxpayer’s capital interest in the trust;

• (b) at the time that the particular unit is issued, the trust is neither a personal trust nor a trust prescribed for the purpose of subsection 107(2); and

• (c) either

  • (i) the particular unit is capital property and the amount is not proceeds of disposition of a capital interest in the trust, or

Marginal note:Where acquisition by another of right to enforce

(25.4) If at a particular time a taxpayer’s capital interest in a trust includes a right to enforce payment of an amount by the trust, the amount shall be added at the particular time to the cost otherwise determined to the taxpayer of the capital interest where

• [...]

• (c) if the right to enforce payment of the amount had been satisfied by a payment to the taxpayer by the trust, there would have been no disposition of that right for the purposes of this Act because of the application of paragraph (i) of the definition disposition in subsection (1).

108 (1) In this Subdivision,

accumulating income

accumulating income  of a trust for a taxation year means the amount that would be the income of the trust for the year if that amount were computed

• [...]

• (b) as if the greatest amount that the trust was entitled to claim under subsection 104(6) in computing its income for the year were so claimed, and

• (c) without reference to subsection 12(10.2), except to the extent that that subsection applies to amounts paid to a trust to which paragraph 70(6.1)(b) applies and before the death of the spouse or common-law partner referred to in that paragraph; (revenu accumulé)

beneficiary

beneficiary  under a trust includes a person beneficially interested therein; (bénéficiaire)

capital interest

capital interest  of a taxpayer in a trust means all rights of the taxpayer as a beneficiary under the trust, and after 1999 includes a right (other than a right acquired before 2000 and disposed of before March 2000) to enforce payment of an amount by the trust that arises as a consequence of any such right, but does not include an income interest in the trust; (participation au capital)

cost amount

cost amount  to a taxpayer at any time of a capital interest or part of it, as the case may be, in a trust, means (notwithstanding subsection 248(1) and except for the purposes of subsection 107(3.1) and section 107.4 and except in respect of a capital interest in a trust that is at that time a foreign affiliate of the taxpayer),

• (a) where any money or other property of the trust has been distributed by the trust to the taxpayer in satisfaction of all or part of the taxpayer’s capital interest (whether on the winding-up of the trust or otherwise), the total of

  • [...]

  • (ii) all amounts each of which is the cost amount to the trust, immediately before the distribution, of each such other property,

• (a.1) where that time (in this paragraph referred to as the “particular time”) is immediately before the time that is immediately before the time of the death of the taxpayer and subsection 104(4) or (5) deems the trust to dispose of property at the end of the day that includes the particular time, the amount that would be determined under paragraph (b) if the taxpayer had died on a day that ended immediately before the time that is immediately before the particular time, and

• (b) in any other case, the amount determined by the formula

  [...]

  A 

  is the total of

  • (i) all money of the trust on hand immediately before that time, and

  • (ii) all amounts each of which is the cost amount to the trust, immediately before that time, of each other property of the trust,

  B 

  is the total of all amounts each of which is the amount of any debt owing by the trust, or of any other obligation of the trust to pay any amount, that was outstanding immediately before that time,

  C 

  is the fair market value at that time of the capital interest or part thereof, as the case may be, in the trust, and

  D 

  is the fair market value at that time of all capital interests in the trust; (coût indiqué)

eligible offset

eligible offset  at any time of a taxpayer in respect of all or part of the taxpayer’s capital interest in a trust is the portion of any debt or obligation that is assumed by the taxpayer and that can reasonably be considered to be applicable to property distributed at that time in satisfaction of the interest or part of the interest, as the case may be, if the distribution is conditional upon the assumption by the taxpayer of the portion of the debt or obligation; (montant de réduction admissible)

eligible taxable capital gains,

eligible taxable capital gains,  of a trust for a taxation year, means the lesser of

• [...]

• (b) the amount determined by the formula

  A - B

  where

  B 

  is the total of all amounts designated under subsection 104(21.2) by the trust in respect of beneficiaries for taxation years before that year; (gains en capital imposables admissibles)

excluded property

excluded property , of a trust, means property owned by the trust at, and distributed by the trust after, the end of 2016, if

• (a) the trust is not in its first taxation year that begins after 2016 a trust described in subparagraph (c.1)(iii.1) of the definition principal residence in section 54, and

• (b) the property is a property that would be the trust’sprincipal residence (as defined in section 54) for the taxation year in which the distribution occurs if

  • [...]

  • (ii) the trust designated the property under that definition as its principal residence for the taxation year; (bien exclu)

income interest

income interest  of a taxpayer in a trust means a right (whether immediate or future and whether absolute or contingent) of the taxpayer as a beneficiary under a personal trust to, or to receive, all or any part of the income of the trust and, after 1999, includes a right (other than a right acquired before 2000 and disposed of before March 2000) to enforce payment of an amount by the trust that arises as a consequence of any such right; (participation au revenu)

inter vivostrust

inter vivostrust means a trust other than a testamentary trust; (fiducie non testamentaire)

pre-1972 spousal trust

pre-1972 spousal trust at a particular time means a trust that was

[...]

that throughout the period beginning at the time it was created and ending at the earliest of January 1, 1993, the day on which the taxpayer’s spouse or common-law partner died and the particular time, was a trust under which the taxpayer’s spouse or common-law partner was entitled to receive all of the income of the trust that arose before the spouse’s or common-law partner’s death, unless a person other than the spouse or common-law partner received or otherwise obtained the use of any of the income or capital of the trust before the end of that period; (fiducie au profit du conjoint antérieure à 1972)

preferred beneficiary

preferred beneficiary  under a trust for a particular taxation year of the trust means a beneficiary under the trust at the end of the particular year who is resident in Canada at that time if

• [...]

• (b) the beneficiary is

  • (i) the settlor of the trust,

  • (ii) the spouse or common-law partner or former spouse or common-law partner of the settlor of the trust, or

  • (iii) a child, grandchild or great grandchild of the settlor of the trust or the spouse or common-law partner of any such person; (bénéficiaire privilégié)

settlor

settlor ,

• (a) in relation to a testamentary trust, means the individual referred to in the definition testamentary trust in this subsection, and

• (b) in relation to an inter vivostrust,

  • (i) if the trust was created by the transfer, assignment or other disposition of property thereto (in this definition referred to as property “contributed”) by not more than one individual and the fair market value of such of the property of the trust as was contributed by the individual at the time of the creation of the trust or at any subsequent time exceeds the fair market value of such of the property of the trust as was contributed by any other person or persons at any subsequent time (such fair market values being determined at the time of the making of any such contribution), means that individual, and

  • (ii) if the trust was created by the contribution of property thereto jointly by an individual and the individual’s spouse or common-law partner and by no other person and the fair market value of such of the property of the trust as was contributed by them at the time of the creation of the trust or at any subsequent time exceeds the fair market value of such of the property of the trust as was contributed by any other person or persons at any subsequent time (such fair market values being determined at the time of the making of any such contribution), means that individual and the spouse or common-law partner; (auteur ou disposant)

testamentary trust

testamentary trust, in a taxation year, means a trust that arose on and as a consequence of the death of an individual (including a trust referred to in subsection 248(9.1)), other than

• (a) a trust created by a person other than the individual,

• (b) a trust created after November 12, 1981 if, before the end of the taxation year, property has been contributed to the trust otherwise than by an individual on or after the individual’s death and as a consequence thereof,

• (c) a trust created before November 13, 1981 if

  • (i) after June 28, 1982 property has been contributed to the trust otherwise than by an individual on or after the individual’s death and as a consequence thereof, or

  • (ii) before the end of the taxation year, the total fair market value of the property owned by the trust that was contributed to the trust otherwise than by an individual on or after the individual’s death and as a consequence thereof and the property owned by the trust that was substituted for such property exceeds the total fair market value of the property owned by the trust that was contributed by an individual on or after the individual’s death and as a consequence thereof and the property owned by the trust that was substituted for such property, and for the purposes of this subparagraph the fair market value of any property shall be determined as at the time it was acquired by the trust, and

• (d) a trust that, at any time after December 20, 2002 and before the end of the taxation year, incurs a debt or any other obligation owed to, or guaranteed by, a beneficiary or any other person or partnership (which beneficiary, person or partnership is referred to in this paragraph as the “specified party”) with whom any beneficiary of the trust does not deal at arm’s length, other than a debt or other obligation

  • (i) incurred by the trust in satisfaction of the specified party’s right as a beneficiary under the trust

    • (A) to enforce payment of an amount of the trust’s income or capital gains payable at or before that time by the trust to the specified party, or

    • (B) to otherwise receive any part of the capital of the trust,

  • (ii) owed to the specified party, if the debt or other obligation arose because of a service (for greater certainty, not including any transfer or loan of property) rendered by the specified party to, for or on behalf of the trust,

  • (iii) owed to the specified party, if

    • (A) the debt or other obligation arose because of a payment made by the specified party for or on behalf of the trust,

    • (B) in exchange for the payment (and in full settlement of the debt or other obligation), the trust transfers property, the fair market value of which is not less than the principal amount of the debt or other obligation, to the specified party within 12 months after the payment was made (or, if written application has been made to the Minister by the trust within that 12-month period, within any longer period that the Minister considers reasonable in the circumstances), and

    • (C) it is reasonable to conclude that the specified party would have been willing to make the payment if the specified party dealt at arm’s length with the trust, except where the trust is the individual’s estate and that payment was made within the first 12 months after the individual’s death (or, if written application has been made to the Minister by the estate within that 12-month period, within any longer period that the Minister considers reasonable in the circumstances), or

  • (iv) incurred by the trust before October 24, 2012 if, in full settlement of the debt or other obligation the trust transfers property, the fair market value of which is not less than the principal amount of the debt or other obligation, to the person or partnership to whom the debt or other obligation is owed within 12 months after the day on which the Technical Tax Amendments Act, 2012 receives royal assent (or if written application has been made to the Minister by the trust within that 12-month period, within any longer period that the Minister considers reasonable in the circumstances); (fiducie testamentaire)

trust

trust includes an inter vivostrust and a testamentary trust but in subsections 104(4), (5), (5.2), (12), (13.1), (13.2), (14) and (15) and sections 105 to 107 does not include

• (a) an amateur athlete trust, an employee life and health trust, an employee trust, a trust described in paragraph 149(1)(o.4) or a trust governed by a deferred profit sharing plan, an employee benefit plan, an employees profit sharing plan, a FHSA, a foreign retirement arrangement, a pooled registered pension plan, a registered disability savings plan, a registered education savings plan, a registered pension plan, a registered retirement income fund, a registered retirement savings plan, a registered supplementary unemployment benefit plan or a TFSA,

• (a.1) a trust (other than a trust described in paragraph (a), (d) or (h), a trust to which subsection 7(2) or (6) applies or a trust prescribed for the purpose of subsection 107(2)) all or substantially all of the property of which is held for the purpose of providing benefits to individuals each of whom is provided with benefits in respect of, or because of, an office or employment or former office or employment of any individual,

• (b) a related segregated fund trust (within the meaning assigned by section 138.1),

• (c) a trust deemed by subsection 143(1) to exist in respect of a congregation that is a constituent part of a religious organization,

• (d) an RCA trust (within the meaning assigned by subsection 207.5(1)),

• (e) a trust each of the beneficiaries under which was at all times after it was created a trust referred to in paragraph (a), (b) or (d) or a person who is a beneficiary of the trust only because of being a beneficiary under a trust referred to in any of those paragraphs, or

• (e.1) a cemetery care trust or a trust governed by an eligible funeral arrangement,

[...]

• (f) a trust that, at that time, is a unit trust,

• (g) a trust all interests in which, at that time, have vested indefeasibly, other than

  • (i) an alter ego trust, a joint spousal or common-law partner trust, a post-1971 spousal or common-law partner trust or a trust to which paragraph 104(4)(a.4) applies,

  • [...]

  • (iii) a trust that has, in its return of income under this Part for its first taxation year that ends after 1992, elected that this paragraph not apply,

  • (iv) a trust that is at that time resident in Canada where the total fair market value at that time of all interests in the trust held at that time by beneficiaries under the trust who at that time are non-resident is more than 20% of the total fair market value at that time of all interests in the trust held at that time by beneficiaries under the trust,

  • (v) a trust under the terms of which, at that time, all or part of a person’s interest in the trust is to be terminated with reference to a period of time (including a period of time determined with reference to the person’s death), otherwise than as a consequence of terms of the trust under which an interest in the trust is to be terminated as a consequence of a distribution to the person (or the person’s estate) of property of the trust if the fair market value of the property to be distributed is required to be commensurate with the fair market value of that interest immediately before the distribution, or

  • (vi) a trust that, before that time and after December 17, 1999, has made a distribution to a beneficiary in respect of the beneficiary’s capital interest in the trust, if the distribution can reasonably be considered to have been financed by a liability of the trust and one of the purposes of incurring the liability was to avoid taxes otherwise payable under this Part as a consequence of the death of any individual, or

• (h) an employee ownership trust. (fiducie)

Marginal note:Testamentary trust not disqualified

(1.1) For the purpose of the definition testamentary trust in subsection (1), a contribution to a particular trust does not include

• (a) a qualifying expenditure (within the meaning of section 118.04, 118.041 or 122.92) of a beneficiary under the trust; or

• (b) an amount paid to, or on behalf of, the trust by another trust if

  • (i) the trust is an individual’s graduated rate estate (determined without regard to the payment and this subsection),

  • (ii) paragraph 104(13.4)(b) applies to the other trust, for a taxation year that ends at a time determined by reference to the individual’s death, because of a joint election made under subparagraph 104(13.4)(b.1)(iii) by the other trust and the legal representative administering the estate,

  • [...]

  • (iv) the amount of the payment does not exceed the amount by which that tax payable is greater than it would have been if paragraph 104(13.4)(b) did not apply to the other trust in respect of the taxation year referred to in subparagraph (ii).

Marginal note:When trust is a unit trust

(2) For the purposes of this Act, a trust is a unit trust at any particular time if, at that time, it was an inter vivostrust the interest of each beneficiary under which was described by reference to units of the trust, and

• (a) the issued units of the trust included

  • (i) units having conditions attached thereto that included conditions requiring the trust to accept, at the demand of the holder thereof and at prices determined and payable in accordance with the conditions, the surrender of the units, or fractions or parts thereof, that are fully paid, or

  • (ii) units qualified in accordance with prescribed conditions relating to the redemption of the units by the trust,

  and the fair market value of such of the units as had conditions attached thereto that included such conditions or as were so qualified, as the case may be, was not less than 95% of the fair market value of all of the issued units of the trust (such fair market values being determined without regard to any voting rights attaching to units of the trust);

• (b) each of the following conditions was satisfied:

  • (i) throughout the taxation year that includes the particular time (in this paragraph referred to as the “current year”), the trust was resident in Canada,

  • (ii) throughout the period or periods (in this paragraph referred to as the “relevant periods”) that are in the current year and throughout which the conditions in paragraph (a) are not satisfied in respect of the trust, its only undertaking was

    • [...]

    • (B) the acquiring, holding, maintaining, improving, leasing or managing of any real property or an interest in real property, or of any immovable or a real right in immovables, that is capital property of the trust, or

  • [...]

  • (vi) where the trust would not be a unit trust at the particular time if this paragraph were read without reference to this subparagraph and subparagraph (iii) were read without reference to clause (F), the units of the trust are listed at any time in the current year or in the following taxation year on a designated stock exchange in Canada, or

• (c) the fair market value of the property of the trust at the end of 1993 was primarily attributable to real property or an interest in real property — or to immovables or a real right in immovables — and the trust was a unit trust throughout any calendar year that ended before 1994 and the fair market value of the property of the trust at the particular time is primarily attributable to property described in paragraph (a) or (b) of the definition qualified investment in section 204, real property or an interest in real property — or immovables or a real right in immovables — or any combination of those properties.

Marginal note:Interest rate hedging agreements

(2.1) For the purposes of subparagraph (2)(b)(iv), if an amount included in computing the income of a trust is derived from, or from the disposition of, an agreement that can reasonably be considered to have been made by the trust to reduce its risk from fluctuations in interest rates in respect of debt incurred by the trust to acquire or refinance property described in subparagraph (2)(b)(iii), the amount is deemed to be derived from that property.

Marginal note:Income of a trust in certain provisions

(3) For the purposes of the definition income interest in subsection (1), subclause (c.1)(iii.1)(D)(II) of the definition principal residence in section 54 and the definitions lifetime benefit trust in subsection 60.011(1) and exempt foreign trust in subsection 94(1), the income of a trust is its income computed without reference to the provisions of this Act and, for the purposes of the definition pre-1972 spousal trust in subsection (1) and paragraphs 70(6)(b) and (6.1)(b), 73(1.01)(c) and 104(4)(a), the income of a trust is its income computed without reference to the provisions of this Act, minus any dividends included in that income

• (a) that are amounts not included by reason of section 83 in computing the income of the trust for the purposes of the other provisions of this Act;

Marginal note:Trust not disqualified

(4) For the purposes of the definition pre-1972 spousal trust in subsection (1), subparagraphs 70(6)(b)(ii) and (6.1)(b)(ii) and paragraphs 73(1.01)(c) and 104(4)(a), if a trust was created by a taxpayer whether by the taxpayer’s will or otherwise, no person is deemed to have received or otherwise obtained or to be entitled to receive or otherwise obtain the use of any income or capital of the trust solely because of

• (a) the payment, or provision for payment, as the case may be, by the trust of

  • (i) any estate, legacy, succession or inheritance duty payable, in consequence of the death of the taxpayer, or a spouse or common-law partner of the taxpayer who is a beneficiary under the trust, in respect of any property of, or interest in, the trust, or

  • (ii) any income or profits tax payable by the trust in respect of any income of the trust; or

• (b) the inhabiting at any time by an individual of a housing unit that is, or is in respect of, property that is owned at that time by the trust, if

  • (i) the property is described in the definition principal residence in section 54 in respect of the trust for the trust’s taxation year that includes that time, and

(5) Except as otherwise provided in this Part,

• (a) an amount included in computing the income for a taxation year of a beneficiary of a trust under subsection 104(13) or (14) or section 105 shall be deemed to be income of the beneficiary for the year from a property that is an interest in the trust and not from any other source, and

• (b) an amount deductible in computing the amount that would, but for subsections 104(6) and (12), be the income of a trust for a taxation year shall not be deducted by a beneficiary of the trust in computing the beneficiary’s income for a taxation year,

[...]

Marginal note:Variation of trusts

(6) Where at any time the terms of a trust are varied

• (a) for the purposes of subsections 104(4), (5) and (5.2) and subject to paragraph (b), the trust is, at and after that time, deemed to be the same trust as, and a continuation of, the trust immediately before that time;

• [...]

• (c) for the purposes of paragraph 53(2)(h), subsection 107(1), paragraph (j) of the definition excluded right or interest in subsection 128.1(10) and the definition personal trust in subsection 248(1), no interest of a beneficiary under the trust before it was varied is considered to be consideration for the interest of the beneficiary in the trust as varied.

Marginal note:Interests acquired for consideration

(7) For the purposes of paragraph 53(2)(h), subparagraph (c)(i) of the definition exempt amount in subsection 94(1), subsection 107(1), paragraph (j) of the definition excluded right or interest in subsection 128.1(10) and paragraph (b) of the definition personal trust in subsection 248(1),

• (a) an interest in a trust is deemed not to be acquired for consideration solely because it was acquired in satisfaction of any right as a beneficiary under the trust to enforce payment of an amount by the trust; and

• (b) if all the beneficial interests in a particular trust acquired by way of the transfer, assignment or other disposition of property to the particular trust were acquired by

  • [...]

  • (ii) two or more persons who would be related to each other if

    • (A) a trust and another person were related to each other, where the other person is a beneficiary under the trust or is related to a beneficiary under the trust, and

    • (B) a trust and another trust were related to each other, where a beneficiary under the trust is a beneficiary under the other trust or is related to a beneficiary under the other trust,

  any beneficial interest in the particular trust acquired by such a person is deemed to have been acquired for no consideration.

107 (1) Where a taxpayer has disposed of all or any part of the taxpayer’s capital interest in a trust,

• (a) where the trust is a personal trust or a prescribed trust, for the purpose of computing the taxpayer’s capital gain, if any, from the disposition, the adjusted cost base to the taxpayer of the interest or the part of the interest, as the case may be, immediately before the disposition is, unless any part of the interest has ever been acquired for consideration and, at the time of the disposition, the trust is non-resident, deemed to be the greater of

  [...]

• [...]

• (c) where the taxpayer is not a mutual fund trust, the taxpayer’s loss from the disposition is deemed to be the amount, if any, by which the amount of that loss otherwise determined exceeds the amount, if any, by which

  • (i) the total of all amounts each of which was received or would, but for subsection 104(19), have been received by the trust on a share of the capital stock of a corporation before the disposition (and, where the trust is a unit trust, after 1987) and

    • (A) where the taxpayer is a corporation,

      • (I) was a taxable dividend designated under subsection 104(19) by the trust in respect of the taxpayer, to the extent of the amount of the dividend that was deductible under section 112 or subsection 115(1) or 138(6) in computing the taxpayer’s taxable income or taxable income earned in Canada for any taxation year, or

      • (II) was an amount designated under subsection 104(20) by the trust in respect of the taxpayer,

    • (B) where the taxpayer is another trust, was an amount designated under subsection 104(19) or 104(20) by the trust in respect of the taxpayer, and

    • (C) where the taxpayer is not a corporation, trust or partnership, was an amount designated under subsection 104(20) by the trust in respect of the taxpayer

  [...]

  • (ii) the portion of the total determined under subparagraph 107(1)(c)(i) that can reasonably be considered to have resulted in a reduction, under this paragraph, of the taxpayer’s loss otherwise determined from a previous disposition of an interest in the trust;

• (d) where the taxpayer is a partnership, the share of a person (other than another partnership or a mutual fund trust) of any loss of the partnership from the disposition is deemed to be the amount, if any, by which that loss otherwise determined exceeds the amount, if any, by which

  • (i) the total of all amounts each of which is a dividend that was received or would, but for subsection 104(19), have been received by the trust on a share of the capital stock of a corporation before the disposition (and, where the trust is a unit trust, after 1987) and

    • (A) where the person is a corporation,

      • (I) was a taxable dividend that was designated under subsection 104(19) by the trust in respect of the taxpayer, to the extent of the amount of the dividend that was deductible under section 112 or subsection 115(1) or 138(6) in computing the person’s taxable income or taxable income earned in Canada for any taxation year, or

      • (II) was a dividend designated under subsection 104(20) by the trust in respect of the taxpayer and was an amount received by the person,

    • (B) where the person is an individual other than a trust, was a dividend designated under subsection 104(20) by the trust in respect of the taxpayer and was an amount received by the person, and

    • (C) where the person is another trust, was a dividend designated under subsection 104(19) or 104(20) by the trust in respect of the taxpayer and was an amount received by the person (or that would have been received by the person if this Act were read without reference to subsection 104(19)),

    [...]

  • (ii) the portion of the total determined under subparagraph 107(1)(d)(i) that can reasonably be considered to have resulted in a reduction, under this paragraph, of the person’s loss otherwise determined from a previous disposition of an interest in the trust; and

Marginal note:Cost of capital interest in a trust

(1.1) The cost to a taxpayer of a capital interest of the taxpayer in a personal trust or a prescribed trust is deemed to be,

• (a) where the taxpayer elected under subsection 110.6(19) in respect of the interest and the trust does not elect under that subsection in respect of any property of the trust, the taxpayer’s cost of the interest determined under paragraph 110.6(19)(a); and

Marginal note:Deemed fair market value — non-capital property

(1.2) For the purpose of section 10, the fair market value at any time of a capital interest in a trust is deemed to be equal to the amount that is the total of

[...]

Marginal note:Distribution by personal trust

(2) Subject to subsections (2.001), (2.002) and (4) to (5), if at any time a property of a personal trust or a prescribed trust is distributed (otherwise than as a SIFT trust wind-up event) by the trust to a taxpayer who was a beneficiary under the trust and there is a resulting disposition of all or any part of the taxpayer’s capital interest in the trust,

• (a) the trust shall be deemed to have disposed of the property for proceeds of disposition equal to its cost amount to the trust immediately before that time;

• (b) subject to subsection (2.2), the taxpayer is deemed to have acquired the property at a cost equal to the total of its cost amount to the trust immediately before that time and the specified percentage of the amount, if any, by which

  [...]

• [...]

• (c) the taxpayer’s proceeds of disposition of the capital interest in the trust (or of the part of it) disposed of by the taxpayer on the distribution are deemed to be equal to the amount, if any, by which

  [...]

• (d) where the property so distributed was depreciable property of a prescribed class of the trust and the amount that was the capital cost to the trust of that property exceeds the cost at which the taxpayer is deemed by this section to have acquired the property, for the purposes of sections 13 and 20 and any regulations made under paragraph 20(1)(a)

  • (i) the capital cost to the taxpayer of the property shall be deemed to be the amount that was the capital cost of the property to the trust, and

Marginal note:No rollover on election by a trust

(2.001) Where a trust makes a distribution of a property to a beneficiary of the trust in full or partial satisfaction of the beneficiary’s capital interest in the trust and so elects in prescribed form filed with the Minister with the trust’s return of income for its taxation year in which the distribution occurred, subsection (2) does not apply to the distribution if

• (a) the trust is resident in Canada at the time of the distribution;

• [...]

• (c) the property is capital property used in, or property described in the inventory of, a business carried on by the trust through a permanent establishment (as defined by regulation) in Canada immediately before the time of the distribution.

Marginal note:No rollover on election by a beneficiary

(2.002) Where a non-resident trust makes a distribution of a property (other than a property described in paragraph (2.001)(b) or (c)) to a beneficiary of the trust in full or partial satisfaction of the beneficiary’s capital interest in the trust and the beneficiary makes an election under this subsection in prescribed form filed with the Minister with the beneficiary’s return of income for the beneficiary’s taxation year in which the distribution occurred,

[...]

Marginal note:Distribution of principal residence

(2.01) Where property that would, if a personal trust had designated the property under paragraph (c.1) of the definition principal residence in section 54, be a principal residence (within the meaning of that definition) of the trust for a taxation year, is at any time (in this subsection referred to as “that time”) distributed by the trust to a taxpayer in circumstances in which subsection (2) applies and the trust so elects in its return of income for the taxation year that includes that time,

• (a) the trust shall be deemed to have disposed of the property immediately before the particular time that is immediately before that time for proceeds of disposition equal to the fair market value of the property at that time; and

• (b) the trust shall be deemed to have reacquired the property at the particular time at a cost equal to that fair market value.

Marginal note:Other distributions

(2.1) Where at any time a property of a trust is distributed by the trust to a beneficiary under the trust, there would, if this Act were read without reference to paragraphs (h) and (i) of the definition disposition in subsection 248(1), be a resulting disposition of all or any part of the beneficiary’s capital interest in the trust (which interest or part, as the case may be, is in this subsection referred to as the “former interest”) and the rules in subsections (2) and (3.1) and sections 88.1 and 132.2 do not apply in respect of the distribution,

• (a) the trust is deemed to have disposed of the property for proceeds equal to its fair market value at that time;

• [...]

• (c) unless the trust is a mutual fund trust, the beneficiary’s proceeds of disposition of the portion of the former interest disposed of by the beneficiary on the distribution are deemed to be equal to the amount, if any, by which

  [...]

  • (ii) where the property is not a Canadian resource property or foreign resource property, the amount, if any, by which

    [...]

    • (B) the cost amount to the trust of the property immediately before that time, and

• (d) notwithstanding paragraphs (a) to (c), where the trust is non-resident at that time, the property is not described in paragraph (2.001)(b) or (c) and, if this Act were read without reference to this paragraph, there would be no income, loss, taxable capital gain or allowable capital loss of a taxpayer in respect of the property because of the application of subsection 75(2) to the disposition at that time of the property,

  • (i) the trust is deemed to have disposed of the property for proceeds equal to the cost amount of the property,

• (e) where the trust is a mutual fund trust, the distribution occurs in a taxation year of the trust before its 2003 taxation year, the trust has elected under subsection (2.11) in respect of the year and the trust so elects in respect of the distribution in prescribed form filed with the trust’s return of income for the year,

  [...]

Marginal note:Gains not distributed to beneficiaries

(2.11) If a trust that is resident in Canada for a taxation year makes in the taxation year one or more distributions to which subsection (2.1) applies and the trust elects in prescribed form filed with the trust’s return for the year or a preceding taxation year to have one of the following paragraphs apply, the income of the trust for the year (determined without reference to subsection 104(6)) shall, for the purposes of subsections 104(6) and (13), be computed without regard

[...]

Marginal note:Election — subsection (2.11)

(2.12) An election made under subsection (2.11) by a mutual fund trust is deemed, for the trust’s 2003 and subsequent taxation years, not to have been made if

• [...]

• (b) the proceeds of disposition of a beneficiary’s interest in the trust have been determined under paragraph (2.1)(e).

Marginal note:Flow-through entity

(2.2) Where at any time before 2005 a beneficiary under a trust described in paragraph (h), (i) or (j) of the definition flow-through entity in subsection 39.1(1) received a distribution of property from the trust in satisfaction of all or a portion of the beneficiary’s interests in the trust and the beneficiary files with the Minister on or before the beneficiary’s filing-due date for the taxation year that includes that time an election in respect of the property in prescribed form, there shall be included in the cost to the beneficiary of a particular property (other than money) received by the beneficiary as part of the distribution of property the least of

• (a) the amount, if any, by which the beneficiary’s exempt capital gains balance (as defined in subsection 39.1(1)) in respect of the trust for the beneficiary’s taxation year that includes that time exceeds the total of all amounts each of which is

  • (i) an amount by which a capital gain is reduced under section 39.1 in the year because of the beneficiary’s exempt capital gains balance in respect of the trust,

  • (ii) twice an amount by which a taxable capital gain is reduced under section 39.1 in the year because of the beneficiary’s exempt capital gains balance in respect of the trust, or

• (b) the amount by which the fair market value of the particular property at that time exceeds the adjusted cost base to the trust of the particular property immediately before that time, and

Marginal note:Application of subsection (3.1)

(3) Subsection (3.1) applies to a trust’s distribution of property to a taxpayer if

• (a) the distribution is a SIFT trust wind-up event to which section 88.1 does not apply;

• (b) the property is a share and the only shares distributed on any SIFT trust wind-up event of the trust are of a single class of the capital stock of a taxable Canadian corporation; and

• (c) where the trust is a SIFT wind-up entity, the distribution occurs no more than 60 days after the earlier of

  • (i) the first SIFT trust wind-up event of the trust, and

  • (ii) the first distribution to the trust that is a SIFT trust wind-up event of another trust.

Marginal note:SIFT trust wind-up event

(3.1) If this subsection applies to a trust’s distribution of property, the following rules apply:

• (a) the trust is deemed to have disposed of the property for proceeds of disposition equal to the adjusted cost base to the trust of the property immediately before the distribution;

• (b) the taxpayer is deemed to have disposed of the taxpayer’s interest as a beneficiary under the trust for proceeds of disposition equal to the cost amount to the taxpayer of the interest immediately before the distribution;

• (c) the taxpayer is deemed to have acquired the property at a cost equal to

  • (i) if, at all times at which the trust makes a distribution that is a SIFT trust wind-up event, the taxpayer is the only beneficiary under the trust and is a SIFT wind-up entity or a taxable Canadian corporation, the adjusted cost base to the trust of the property immediately before the distribution, and

  • (ii) in any other case, the cost amount to the taxpayer of the taxpayer’s interest as a beneficiary under the trust immediately before the distribution;

• (d) if the taxpayer’s interest as a beneficiary under the trust was immediately before the disposition taxable Canadian property of the taxpayer, the property is deemed to be, at any time that is within 60 months after the distribution, taxable Canadian property of the taxpayer; and

• (e) if a liability of the trust becomes as a consequence of the distribution a liability of the corporation described in paragraph (3)(b) in respect of the distribution, and the amount payable by the corporation on the maturity of the liability is the same as the amount that would have been payable by the trust on its maturity,

  • (i) the transfer of the liability by the trust to the corporation is deemed not to have occurred, and

  • (ii) the liability is deemed

    • (A) to have been incurred or issued by the corporation at the time at which, and under the agreement under which, it was incurred or issued by the trust, and

    • (B) not to have been incurred or issued by the trust.

Marginal note:Trusts in favour of spouse, common-law partner or self

(4) Subsection (2.1) applies (and subsection (2) does not apply) at any time to property distributed to a beneficiary by a trust described in paragraph 104(4)(a) where

• (a) the beneficiary is not

  • (i) in the case of a post-1971 spousal or common-law partner trust, the spouse or common-law partner referred to in paragraph 104(4)(a),

  • (ii) in the case of an alter ego trust, the taxpayer referred to in paragraph 104(4)(a), and

  • (iii) in the case of a joint spousal or common-law partner trust, the taxpayer, spouse or common-law partner referred to in paragraph 104(4)(a); and

• (b) the distribution of the property occurs on or before the earlier of

  • (i) a reacquisition, in respect of any property of the trust, that occurs immediately after the day described by paragraph 104(4)(a), and

  • (ii) the cessation of the trust’s existence.

Marginal note:Where subsection 75(2) applicable to trust

(4.1) Subsection (2.1) applies (and subsection (2) does not apply) in respect of a distribution of any property of a particular personal trust or prescribed trust (other than an excluded property of the particular trust) by the particular trust to a taxpayer who was a beneficiary under the particular trust where

• (a) the distribution was in satisfaction of all or any part of the taxpayer’s capital interest in the particular trust;

• (b) subsection 75(2) was applicable (determined without its reference to “while the person is resident in Canada” and as if subsection 75(3) as it read before March 21, 2013 were read without reference to its paragraph (c.2)), or subsection 94(8.2) was applicable (determined without reference to paragraph 94(8.1)(a)), at a particular time in respect of any property of

  • (i) the particular trust, or

  • (ii) a trust the property of which included a property that, through one or more dispositions to which subsection 107.4(3) applied, became a property of the particular trust, and the property was not, at any time after the particular time and before the distribution, the subject of a disposition for proceeds of disposition equal to the fair market value of the property at the time of the disposition;

• (c) the taxpayer was neither

  • (i) the person (other than a trust described in subparagraph (b)(ii)) from whom the particular trust directly or indirectly received the property, or property for which the property was substituted, nor

Marginal note:Distribution of property received on qualifying disposition

(4.2) Subsection (2.1) applies (and subsection (2) does not apply) at any time to property distributed after December 20, 2002 to a beneficiary by a personal trust or a trust prescribed for the purpose of subsection (2), if

• (a) at a particular time before December 21, 2002 there was a qualifying disposition (within the meaning assigned by subsection 107.4(1)) of the property, or of other property for which the property is substituted, by a particular partnership or a particular corporation, as the case may be, to a trust; and

Marginal note:Distribution to non-resident

(5) Subsection (2.1) applies (and subsection (2) does not apply) in respect of a distribution of a property (other than a share of the capital stock of a non-resident-owned investment corporation or property described in any of subparagraphs 128.1(4)(b)(i) to (iii)) by a trust to a non-resident taxpayer (including a partnership other than a Canadian partnership) in satisfaction of all or part of the taxpayer’s capital interest in the trust.

Marginal note:Instalment interest

(5.1) If, solely because of the application of subsection (5), paragraphs (2)(a) to (c) do not apply to a distribution in a taxation year of taxable Canadian property by a trust, in applying sections 155 and 156 and subsections 156.1(1) to (3) and 161(2), (4) and (4.01) and any regulations made for the purposes of those provisions, the trust’s tax payable under this Part for the year is deemed to be the lesser of

• (a) the trust’s tax payable under this Part for the year, determined before taking into consideration the specified future tax consequences for the year, and

(6) Notwithstanding any other provision of this Act, where a person or partnership (in this subsection referred to as the “vendor”) has disposed of property and would, but for this subsection, have had a loss from the disposition, the vendor’s loss otherwise determined in respect of the disposition shall be reduced by such portion of that loss as may reasonably be considered to have accrued during a period in which

• (a) the property or property for which it was substituted was held by a trust; and

• (b) either

  • (i) the trust was non-resident and the property (or property for which it was substituted) was not taxable Canadian property of the trust, or

  • (ii) neither the vendor — nor a person that would, if section 251.1 were read without reference to the definition controlled in subsection 251.1(3), be affiliated with the vendor — had a capital interest in the trust.