CRA indicates that a Canadian-resident trust was eligible for a full FTC notwithstanding its gain was lower for Canadian than foreign purposes

Where a non-resident trust was deemed to be resident in Canada under s. 94 and a gain which it realized on the disposition of marketable securities was lower for Canadian than U.S. purposes (due to a previous step-up in the securities’ adjusted cost base under s. 128.1(1)(c)), there was no resulting reduction of the foreign non-business income tax credit of the trust – i.e., it got full credit for the U.S. tax paid.

CRA’s reasoning suggests that the same result could obtain for an individual who is resident in Canada on ordinary principles.

Neal Armstrong.  Summary of 28 May 2013 Memorandum 2013-0476381I7 under s. 94(3)(b).