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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
SUBJECT: MASTER TRUST ELECTION SECTION: 149(1)(o.4),
REG 5001]
921090
Glen Thornley
(613) 957-2101
June 25, 1992
Dear Sirs:
Re: Master Trust Election under paragraph 149(1)(o.4) of the Income Tax Act ("the Act")
This is in reply to your letter of April 2, 1992 and further to our telephone conversation (Thornley/XXX) of June 19, 1992 concerning the revocation of a Master Trust Election made under the above noted paragraph of the Act.
As discussed during our telephone conversation, there is no provision in the Act that provides for a revocation of a Master Trust Election. However, before an election can be made by a trust, it first must be prescribed to be a master trust pursuant to the provisions of section 5001 of the Income Tax Regulations (the "Regulations"). Should a master trust contravene one of the conditions in paragraphs (a) to (e) of Regulation 5001 it would, presumably, cease to be an exempt corporation under paragraph 149(1)(o.4) of the Act. Similarly, the trust could also voluntarily cease to operate as a master trust and begin to operate as an ordinary taxable trust.
During our telephone conversation it was suggested that the deemed disposition rules in subsection 149(10) of the Act would be triggered once a master trust was "off-side", however, a further reading of that subsection indicates that it is only applicable to "corporations". Thus, the only apparent consequence of not conforming to the requirements of Regulation 5001 would be the loss of the master trust's non-taxable status.
We trust our comments will be of assistance to you.
Yours truly,
E. Wheeler
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
- c. c. Current Amendments & Regulations Division
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