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.
923305
XXXXXXXXXX W.P. Guglich
(613) 957-2102
Attention: XXXXXXXXXX
December 23, 1992
Dear Sirs:
Re: Bequeath to a Foundation
This is in reply to your letter of November 3, 1992 wherein
you request our views regarding three hypothetical scenarios
involving a taxpayer and XXXXXXXXXX
Scenario 1
The payment of $2,000.00 per month by the Foundation to the friend of the taxpayer could be regarded as consideration for the loan of the property to the Foundation and would be required to be included in the friend's income for the year.
Scenario 2
An amount paid or payable to a beneficiary out of the income of a trust is, pursuant to paragraphs 104(13)(a) and (c), required to be included in computing the income of the beneficiary for the year. Subsection 105(1) of the Act provides that the value of all benefits received or enjoyed by a taxpayer from or under a trust - other than capital contributions - are to be included in the taxpayers income. In addition, under subsection 105(2) of the Act, a reasonable portion of amounts paid out of the income of a trust for the upkeep of property maintained under the terms of the trust arrangement for use of a life tenant or other beneficiary is required to be included in the income of the life tenant or other beneficiary for the taxation year for which the amount were paid.
The comments in paragraph 3 of IT-111R would not apply to this scenario.
Scenario 3
Where the taxpayer or his estate purchases an annuity payable to his friend the comments in paragraph 3 of IT-111R would not apply. The comments in paragraph 1 of IT-111R would apply resulting in the friend being required to include in income the interest portion of the annuity payments.
The foregoing comments represent our general views with respect to the subject matter of your letter. The facts of a particular situation may lead to different conclusions. the foregoing opinions are not rulings and, in accordance with the guidelines set out in Information Circular 70-6R2 dated September 28, 1990, are not binding on the Department.
Yours truly,
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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© Sa Majesté la Reine du Chef du Canada, 1992
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