Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Treatment of mutual fund distributions by a corporation with other than a December 31 year-end.
Position TAKEN:
Distributions are reported in the taxation year of the beneficiary in which the taxation year of the trust ended.
Reasons FOR POSITION TAKEN:
Reading of Act and IT-342R.
942947
XXXXXXXXXX T. Murphy
Attention: XXXXXXXXXX
December 9, 1994
Dear Sirs/Mesdames:
Re: Treatment of Mutual Fund Distributions by Corporations
This is in reply to your letter dated September 11, 1994 which was postmarked November 12 and received by us on November 16.
Your specific enquiry is how a corporation which does not have a December 31 year-end should report distributions received from a mutual fund trust. For example, if a corporation with an April 30, 1994 year- end receives a distribution from the mutual fund trust in February 1994, it will not know what type of income that distribution represents until it receives its 1994 T3 Supplementary and, consequently, does not know how to report that distribution in computing its 1994 income.
The answer to your enquiry is found in paragraph 104(13)(a) of the Income Tax Act and paragraph 6 of Interpretation Bulletin IT-342R.
Paragraph 104(13)(a):
There shall be included in computing the income for a taxation year of a beneficiary under a trust...
(a) in the case of a trust...that was resident in Canada throughout its particular taxation year that ended in the year, such part of the amount that but for subsections (6) and (12), would be the trust's income for the particular year as became payable in the particular year to the beneficiary.
Paragraph 6 of Interpretation Bulletin IT-342R:
The amounts required to be included in income of a beneficiary for a taxation year under subsections 104(13) and 105(2) are considered to have been earned by the beneficiary on the last day of the taxation year of the trust and are thus in respect of the taxation year or years of the trust which ended in the taxation year of the beneficiary.
We trust our comments will be of assistance to you.
Yours truly,
A/Director
Manufacturing Industries, Partnerships
and Trusts Division
Rulings Directorate
Policy and Legislation Branch
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