11 July 1989 Ministerial Correspondence 73774 F - Non-resident's Income as a Beneficiary of a Trust

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.

SUBJECT:  Non-Resident's Income as a Beneficiary of a Trust

This is in reply to your memorandum of March 21, 1989 wherein you requested our opinion as to what circumstances would require income from a trust to be included in computing a non-resident beneficiary's income under subsection 2(3) of the Income Tax Act (the "Act").

Subsection 210.3(2) of the Act deems certain non-resident beneficiaries of a trust not to be designated beneficiaries of a trust at any time in the year where they are required to include an amount in computing their income which is subject to tax under Part 1 by reason of subsection 2(3) of the Act and the amount is not exempt from tax under Part 1 of the Act by virtue of a tax treaty with another country.

Subsection 210.2(3) of the Act provides a mechanism to permit a refund of the Part XII.2 tax payable by the trust on a pro rata basis to those beneficiaries who are not designated beneficiaries.

We contacted the Department of Finance to determine what types of entities might fall within the wording of subsection 210.2(3) of the Act and Carol Muirhead indicated that the paragraph (b) of that subsection was primarily meant to apply to certain non-resident insurers.  They indicated that it may also encompass other entities but provided no specific examples.

We trust this is adequate for your purposes and we are prepared to respond to any specific questions you may have on this matter.

D. Dalphyfor DirectorReorganizations and Non-Resident DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch