Income Tax Act

Marginal note:Treatment of beneficiaries under qualifying environmental trusts

• 107.3 (1) Where a taxpayer is a beneficiary under a qualifying environmental trust in a taxation year of the trust (in this subsection referred to as the “trust’s year”) that ends in a particular taxation year of the taxpayer,

  • (a) subject to paragraph 107.3(1)(b), the taxpayer’s income, non-capital loss and net capital loss for the particular year shall be computed as if the amount of the income or loss of the trust for the trust’s year from any source or from sources in a particular place were the income or loss of the taxpayer from that source or from sources in that particular place for the particular year, to the extent of the portion thereof that can reasonably be considered to be the taxpayer’s share of such income or loss; and

  • (b) if the taxpayer is non-resident at any time in the particular year and an income or loss described in paragraph 107.3(1)(a) or an amount to which paragraph 12(1)(z.1) or (z.2) applies would not otherwise be included in computing the taxpayer’s taxable income or taxable income earned in Canada, as the case may be, notwithstanding any other provision of this Act, the income, the loss or the amount shall be attributed to the carrying on of business in Canada by the taxpayer through a fixed place of business located in the province in which the site to which the trust relates is situated.

• Marginal note:Transfers to beneficiaries

  (2) Where property of a qualifying environmental trust is transferred at any time to a beneficiary under the trust in satisfaction of all or any part of the beneficiary’s interest as a beneficiary under the trust,

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

  • (b) the beneficiary shall be deemed to have acquired the property at that time at a cost equal to its fair market value at that time.

• Marginal note:Ceasing to be qualifying environmental trust

  (3) If at any time a trust ceases to be a qualifying environmental trust,

  • (a) for the purposes of subsections 111(5.5) and 149(10), the trust is deemed to cease at that time to be exempt from tax under this Part on its taxable income;

  • (b) each beneficiary under the trust immediately before that time is deemed to receive at that time from the trust an amount equal to the percentage of the fair market value of the properties of the trust immediately after that time that can reasonably be considered to be the beneficiary’s interest in the trust; and

  • (c) each beneficiary under the trust is deemed to acquire immediately after that time an interest in the trust at a cost equal to the amount deemed by paragraph (b) to be received by the beneficiary from the trust.

• Marginal note:Application

  (4) Subsection 104(13) and sections 105 to 107 do not apply to a trust with respect to a taxation year during which it is a qualifying environmental trust.