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.
CANADIAN TAX FOUNDATION
B.C. TAX CONFERENCE
SEPTEMBER 1992
QUESTION #30
Given that most trusts created after February 11, 1991 will probably be structured to take advantage of proposed subsection 104(5.3), how will the Department interpret proposed paragraph 104(5.5)(b)?
DEPARTMENT'S POSITION
In order to defer a deemed disposition of trust assets on January 1, 1993 by electing pursuant to proposed subsection 104(5.3), the trust must have "exempt beneficiaries" as defined by proposed subsection 104(5.4). Proposed paragraph 104(5.5)(b) will deem an individual who is otherwise beneficially interested in a trust to not be a beneficiary under the trust at a particular time where it is reasonable to consider that one of the main purposes for the creation of the interest of the individual in the trust was to defer the day determined in respect of the trust under paragraph 104(4)(a.1) or (b).
Document Disclosed Pursuant to The Access To Information Act Document Divulgué en vertu de la loi sur l'accès à l'information
Of necessity, the application of such an avoidance provision must be considered on a case by case basis with consideration of the facts of each particular circumstance. However, as stated in the Department of Finance Explanatory Notes on the Draft Legislation, the paragraph could have application, for instance, where an individual is given a nominal absolute interest under the trust or a contingent interest which is virtually certain not to vest. This might be a situation where no other beneficiary of the trust qualifies as an "exempt beneficiary" and the only practical reason for having the individual as a beneficiary is to allow the trust to qualify for an election under proposed subsection 104(5.3).
G. Kauppinen
September 2, 1992
Document Disclosed Pursuant to The Access To Information Act Document Divulgué en vertu de la loi sur l'accès à l'information
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