CRA indicates that where real estate is rolled out to a non-resident beneficiary under s. 107(2), the s. 116 certificate will be based on the property’s ACB

A resident trust deriving its value primarily from Canadian real estate transferred one of the properties on an s. 107(2) rollover basis to a non-resident beneficiary. CRA indicated:

• Although s. 116(5.1) will deem the consideration paid by the trust for purposes of s. 116 to be the FMV of the Canadian real estate received, if greater than its ACB, on an administrative basis, CRA will accept the rollover amount under s. 107(2) as representing the proceeds for purposes of issuing a certificate of compliance under s. 116, where there clearly is no risk to the Canadian tax base - which would include situations where the transferred property is Canadian real estate or other property described in s. 128.1(4)(b)(i) to (iii).
• In the above circumstances, CRA would issue a certificate of compliance under s. 116 showing proceeds of disposition of the capital interest in the trust equal to the ACB of the distributed property to the trust. The FMV, as disclosed to CRA during the notification process, would be listed in the notes on the certificate of compliance.

Neal Armstrong. Summary of 17 June 2025 STEP Roundtable, Q.15 under s. 116(5).