Principales Questions: In a given situation where a trust has a taxable capital gain of $ 200,000 and a rental loss of $ 100,000, whether the trust can deduct by virtue of paragraph 104(6)(b) the amount of $ 200,000 corresponding to the taxable capital gain paid in the year to a beneficiary?
Position Adoptée: No. The amount that the trust is eligible to claim by virtue of paragraph 104(6)(b) cannot exceed the amount of its income determined for the year. In the given situation, the maximum amount deductible by the trust would be $ 100,000. When a trust paid an amount in excess of the amount deductible by virtue of paragraph 104(6)(b), depending on all the facts surrounding the situation and the terms of the trust deed, the application of subsection 105(1) should be considered.
Raisons: Firstly, a trust's income for a taxation year is determined under section 3. The maximum amount that may be deducted under paragraph 104(6)(b) is the trust’s income determined under Part I, before the deductions under paragraphs 104(6) and (12). Subsection 105(1) includes in a taxpayer's income the value of all benefits from or under a trust. The provision extends to benefits received by any taxpayer under the trust other than, among others, an amount otherwise included in the beneficiary’s income or an amount paid as a capital distribution by virtue of the trust deed.
