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.
STRATEGY INSTITUTE - 1998 Round Table
Question
Designations of Taxable Capital Gains
In designating taxable capital gains under subsection 104(21) of the Act, can the entire taxable capital gain be designated to a beneficiary who received only 75% of the capital gain (i.e., the taxable portion only)?
Response
Subsection 104(21) permits a trust to designate a portion of its net taxable capital gains for a taxation year as a taxable capital gain of a beneficiary of the trust. In essence, the designated portion of the net taxable capital gains of the trust is deemed to be the taxable capital gain of a particular beneficiary. The amount of the net taxable capital gains that may be designated to a particular beneficiary is limited to the portion of the net taxable capital gains as may reasonably be considered having regard to all circumstances, including the terms and conditions of the trust arrangement, to be part of the amount included in computing the beneficiary’s income for the taxation year under subsection 104(13) or (14) or section 105.
Subsection 104(21) does not, however, deem the beneficiaries to have triggered the capital gains themselves. Thus, a beneficiary’s entitlement to only the taxable portion of the capital gain would not affect the amount available to be designated to that beneficiary under subsection 104(21).
Lena Holloway
June, 1998
981493
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