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: How to file an election under subparagraph 107.4(3)(a)(i) as there is no prescribed form available.
Position: In place of a prescribed form, the transferor trust should attach a letter, setting out the details of the election, to the T3 Trust Income Tax and Information Return for the taxation year that includes the time of the qualifying disposition. The election should be filed on or before the filing due date of the transferor's T3 Trust Income Tax and Information Return.
XXXXXXXXXX
2013-047486
March 20, 2013
Dear XXXXXXXXXX,
This is in reply to your email dated January 3, 2013 in which you requested information on how to file an election in writing under subparagraph 107.4(3)(a)(i) of the Income Tax Act (Canada) ("the Act") in respect of a trust to trust transfer.
Subsection 107.4(3) of the Act generally provides for a rollover of property to a trust where the property is transferred to the trust by way of a qualifying disposition. For this purpose, subsection 107.4(1) defines "qualifying disposition" to be a disposition of property to a trust that does not result in any change in the beneficial ownership of the property and that otherwise meets the conditions set out in that subsection. Subparagraph 107.4(3)(a)(i) provides that where the transferor so elects in writing and files the election with the Minister on or before the transferor's filing due date for the taxation year that includes the time of the qualifying disposition, the proceeds of disposition of the property are deemed to be an amount specified in the election. The amount specified cannot be less than the cost amount to the transferor of the property immediately before the qualifying disposition and not more than the fair market value of the property at the time of qualifying disposition.
There is currently no prescribed form available for the subparagraph 107.4(3)(a)(i) election. In place of a prescribed form, the transferor trust should attach a letter, setting out the details of the election to the T3 Trust Income Tax and Information Return for the taxation year that includes the time of the qualifying disposition. The election should be filed on or before the filing due date of the transferor's T3 Trust Income Tax and Information Return.
Yours truly,
Steve Fron C.A.
Acting Manager
Trust Section II
For Director
Financial Industries and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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