2004 Ruling 2004-0070051R3 - Suppl Ruling for XXXXXXXXXX

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.

Principal Issues: Are distributions of capital by the trust to the Beneficiary subject to 107(2)?

Position: Yes, provided that the trust holds no property that is attributed to any other person under ss 75(2).

Reasons: If the property contributed by the Beneficiary (or substituted property for it) were distributed to any other beneficiary, including a trust for the Beneficiary, 107(4.1) and 107(2.1) would apply, and not 107(2). However, assuming that the trust holds no property which would be attributed to any other person under 75(2), the distribution to the Beneficiary would not be subject to 107(4.1).

XXXXXXXXXX 					2004-007005

XXXXXXXXXX, 2004

Dear XXXXXXXXXX:

Re: XXXXXXXXXX
XXXXXXXXXX
Supplementary Advance Income Tax Ruling

This letter is in reply to your letter of XXXXXXXXXX, in which you asked for clarification of ruling D of the advance income tax ruling which was issued on XXXXXXXXXX, 2004 in respect of the above noted trust (our reference 2002-017152) (the "Ruling"). You have asked us to confirm that paragraph (b), and not paragraph (c), of Ruling D will apply to the distribution of XXXXXXXXXX Property to the Representative.

All capitalized terms have the meaning assigned in the Ruling.

Provided that the facts and proposed transactions set out in the Ruling constitute complete and accurate disclosure of all the relevant facts and proposed transactions and that no person other than the Representative contributes property to the Trust in any of the circumstances described in subsection 75(2), we confirm the following:

D. A distribution of any property of the Trust to any Beneficiary in a taxation year, otherwise than in satisfaction of a right to income of the Trust:

(a) will be considered a disposition of all or part of the Beneficiary's capital interest in the Trust at such time;

(b) will be subject to subsection 107(2) of the Act if the Beneficiary is the Representative and no election is made under subsection 107(2.001) of the Act;

(c) will be subject to subsection 107(2.1) of the Act if the ruling provided in (b) is not applicable; and

(d) if the property distributed is Canadian currency, will not result in a capital gain to the Trust.

We confirm that the rulings A, B and C, and ruling D as amended herein, remain binding on the Canada Revenue Agency subject to the same limitations and qualifications set out in the Ruling.

Yours truly,

XXXXXXXXXX
for Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Planning Branch