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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Is there a potential for double tax when 75(2) applies?
Position: No.
Reasons: Paragraph 10 of IT-369R.
XXXXXXXXXX 2002-012708
Annemarie Humenuk
April 2, 2002
Dear XXXXXXXXXX:
Re: Attribution of Income under Subsection 75(2)
This is in reply to your letter of December 21, 2001, concerning the potential for double taxation where the income of a trust is subject to subsection 75(2) of the Income Tax Act.
As stated in paragraph 10 of IT-369R, Attribution of Trust Income to Settlor, when the income of a trust is attributed to the person who contributed the property to the trust under subsection 75(2), that income is not included in the income of the trust for tax purposes nor is it included in any of the beneficiaries' income under subsection 104(13) when it is paid or payable to a beneficiary. However, any income earned on the attributed income is not attributed to the contributor under subsection 75(2) and would therefore be taxable to the trust to the extent that it is not paid or payable to any or all beneficiaries of the trust pursuant to subsection 104(13) or the subject of a preferred beneficiary election pursuant to subsection 104(14).
We trust our comments will be of assistance. Please include your telephone number in any future correspondence so we may contact you if we require clarification of your question.
Yours truly,
T. Murphy
for Director
International and Trusts Division
Income Tax Rulings Directorate
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