Principal Issues: 1. Where the non-resident Estate obtained a certificate under subsection 116(2) of the Act and further disposes of “taxable Canadian property”, is there a requirement for the Estate to file a return of income pursuant to paragraph 150(1)(c) of the Act?
2. Does the distribution of cash from the non-resident Estate to the non-resident beneficiary in respect of the beneficiary’s capital interest in the Estate result in a disposition of “taxable Canadian property” as defined in subsection 248(1) of the Act?
3. If question #2 is answered by the affirmative, is the disposition of the non-resident beneficiary's capital interest in the Estate an "excluded disposition"?
4. If question #2 is answered by the affirmative, is there a requirement for the non-resident beneficiary to request a certificate pursuant to section 116 of the Act?
Position: 1. No.
2. Yes.
3. Yes.
4. No.
Reasons:
1. In the case at hand, the disposition of the Property by the Estate is an excluded disposition since all conditions in subsection 150(5) of the Act are met. Therefore, subsection 150(1.1) of the Act would apply and as a result, the Estate would not be required to file a return of income for the year.
2. Pursuant to the definition of "taxable Canadian property" in subsection 248(1) of the Act, the non-resident beneficiary's capital interest in the Estate would be considered "taxable Canadian property" pursuant to paragraph (d) of that definition, because at any particular time during the 60-month period that ends at the time of the disposition more than 50% of the fair market value of the non-resident beneficiary’s capital interest in the Estate was derived from real or immovable property situated in Canada.
3. The beneficiary's capital interest in the Estate would be considered excluded property because it qualifies as treaty-exempt property. The disposition of the non-resident beneficiary’s capital interest in the Estate would be considered an “excluded disposition” for the purposes of subsections 150(1.1) and 150(5) of the Act.
4. The non-resident beneficiary would not be required to request a certificate under section 116 of the Act because the non-resident beneficiary's capital interest in the Estate is "excluded property" under subsection 116(6) of the Act.
